$3,700 In Sight: Why banks see Gold’s downside momentum still in control

Institutional views on Gold point to a market caught between strong downside momentum and resilient underlying demand. While some banks warn that recent losses could extend further, others see the selloff as a liquidity-driven washout that may ultimately reinforce the longer-term bullish thesis, with ETF inflows, central-bank buying and a potential easing in Fed hawkishness highlighted as key drivers for a gradual recovery.

UOB Group flags oversold conditions but sees scope for deeper Gold losses

UOB Group underscores that despite Gold entering oversold territory, selling pressure remains intense enough that prices could still fall further. This view suggests traders should not assume a near-term floor has been reached, with risk management and caution around catching a potential falling knife remaining paramount as the bank sees room for an extension of the downtrend.

"While the decline is entering oversold territory, strong downward momentum suggests there is scope for gold to decline further to $3,700."

TD Securities views Gold selloff as liquidity-driven, preserving long-term bull case

TD Securities acknowledges that Gold’s recovery has been modest and that late entrants to the rally may be shaken by heightened risks, but it emphasizes that the recent washout appears more about liquidity than a fundamental collapse in the long-term bullish narrative. For investors, this implies that while near-term volatility and position unwinds may persist, the structural case for higher Gold over time remains intact in TD Securities’ assessment.

"While the recovery is still very modest, and risks remain high that some investors who entered later in the initial rally may have less conviction, there is hope for the bulls that the washout was more liquidity driven than a capitulation of the longer-term bull thesis."

OCBC highlights ETF inflows and Fed shift as foundations for Gold’s medium-term recovery

OCBC points to ongoing ETF inflows and central-bank purchases as evidence that core demand for Gold remains solid, even after the recent positioning washout. The bank argues that this shakeout could pave the way for fresh long positions, and that by 2027 an unwinding of hawkish Fed expectations alongside moderating US Dollar strength and yields should help Gold gradually recover, reinforcing a medium-term constructive outlook.

"Nevertheless, ETF inflows and central-bank purchases continue to underpin underlying demand, while the recent positioning washout may allow long positions to rebuild from pre-breakout levels. Looking into 2027, an eventual unwinding of hawkish Fed expectations and moderation in USD strength and yields should provide support for gold’s recovery."

The takeaway

Taken together, UOB Group’s call for potential further downside in Gold contrasts with TD Securities’ and OCBC’s emphasis on the resilience of the longer-term bullish thesis. The banks collectively signal that while near-term price risks remain skewed lower, the recent washout is seen more as a positioning and liquidity event than a fundamental turning point, with persistent demand and an eventual shift in Fed and US Dollar dynamics expected to underpin a gradual recovery in Gold.