OCBC strategists Sim Moh Siong and Christopher Wong have revised their gold price forecasts downward, citing a combination of elevated oil prices, higher yields, and a more hawkish Federal Reserve stance as key factors weakening gold's near-term outlook [1]. The strategists noted that gold softened in May, attributing this to disruptions in the Hormuz region that lifted yields, supported the US dollar, and prompted a more hawkish repricing of the Fed, all of which have limited gold's safe-haven appeal [1].
Additionally, the report highlights that ETF inflows into gold have slowed, and India's recent increase in import tariffs may further weigh on physical demand at the margin [1]. OCBC suggests that for gold to regain traction in the near term, there would need to be a more favorable external backdrop, including de-escalation of US-Iran tensions, lower oil prices, softer yields, and a more dovish Fed path [1].
Despite these near-term pressures, OCBC maintains that the medium-term outlook for gold remains supported by central bank diversification, strategic allocation demand, and portfolio hedging [1]. The downward revision in gold forecasts reflects expectations for elevated oil prices to persist, continued hawkish Fed repricing, and potential softness in Indian demand [1].
CONCLUSION
OCBC's downward revision of gold price forecasts signals caution for the near term, driven by higher yields, a stronger US dollar, and weaker demand indicators. However, the medium-term outlook remains supported by central bank diversification and portfolio hedging. Investors may need to monitor macroeconomic developments and policy shifts for a potential turnaround in gold's performance.