Wells Fargo: Gold's Downside Potential Narrows, Long-Term Upside Potential Could Reach $1,500

Sameer Samana, head of global equity and real asset strategy at Wells Fargo, stated that after gold pulled back more than 20% from its historical high in January, the market's risk-return structure has changed. The downside potential for gold is narrowing, and its long-term upside potential continues to attract investors. The market has absorbed most of the Federal Reserve's interest rate hike risks, and gold prices are largely reflecting the tightening pressures. Attention should now be paid to whether there will be an unexpected large-scale rate hike in the future, although this likelihood is low. Recently, gold has been under pressure mainly due to rising oil prices, increased expectations of Fed tightening, and higher real yields. Samana believes that market sentiment may be overly pessimistic, as most bearish factors have already been priced in. In the short term, gold may still decline, as the technical indicators have not yet confirmed a bottom, and there is a risk that gold prices could fall to $3,500, with the $4,500 to $4,900 range potentially becoming a resistance level for a rebound. In the long term, an economic slowdown may prompt the Fed to cut rates again, leading to more accommodative measures from policymakers, providing new upward momentum for gold. Wells Fargo expects gold prices to rise to $5,300 to $5,500 per ounce by the end of 2026, and further increase to $5,800 to $6,000 by the end of 2027.

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