Gold Prices Set for Recovery as Negative Factors Priced In, Says Credit Agricole

Gold Stabilizes After Three-Day Decline Amid Geopolitical Uncertainty

Gold prices recovered modestly on Wednesday, trading near $4,100 per ounce, after a three-day decline driven by renewed US-Iran conflict fears. The precious metal found support following US President Donald Trump's statement that Iran is eager to negotiate, easing near-term geopolitical risks.

Credit Agricole Sees Upside Potential Despite Recent Weakness

Despite four months of declines and a test of the $4,000 level, Credit Agricole analysts argue that downside risks are largely reflected in current pricing. The bank highlights that central bank demand and de-dollarization trends provide structural support for gold. "Many negatives are already in the price of gold following its recent sell-off," the firm noted, adding that central banks continue to view XAU as a key instrument to diversify away from USD exposure amid US efforts to weaponize the currency.

Central Bank Demand and Energy Shock Dynamics

The analysis underscores that fading energy price shocks could enable global central banks to resume gold accumulation. Additionally, renewed concerns over fiscal dominance in the US may weigh on real interest rates, creating a more favorable environment for non-yielding assets like gold. Credit Agricole previously recommended a long position in XAUUSD at $4,338 in late June, targeting $5,420 with a stop-loss at $3,800.

Implications for Traders and Investors

Forex and commodity traders are likely to monitor central bank activity and geopolitical developments closely. A sustained shift toward de-dollarization, coupled with persistent inflationary pressures, could bolster demand for gold as a reserve asset. However, any resurgence in US real yields or hawkish Federal Reserve signals may cap upside momentum.

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