Synopsis:

ANZ warns that gold could face a significant correction akin to its 1980s collapse if risk appetite returns and macro conditions stabilize. However, they argue that structural and strategic demand factors remain supportive and make such a collapse less likely this time.

Key Points:

• Profit-taking triggered: The recent drop from the USD 3,500/oz peak was driven by easing tariff concerns, stronger USD, and rising U.S. Treasury yields.

• ETF liquidations: Gold ETF holdings have declined by 33 tonnes since late April, removing a critical pillar of support as speculative positions unwind.

• Historical comparisons raise concern: Fears are rising of a repeat of the 1980s-style 40% gold correction post-record highs in real terms.

• Why it’s different now:

  • Central bank demand remains strong amid global de-dollarization and geopolitical realignments.

  • Investor skepticism toward U.S. assets is rising, evidenced by a divergence between Treasury yields and the USD.

  • Portfolio diversification into gold remains attractive as equities trade at high valuations during economic uncertainty.

• Downside risk scenario: If geopolitical tensions ease materially and the U.S. economy outperforms expectations, gold could correct further toward USD 3,000/oz.

Conclusion:

While ANZ acknowledges the risk of a deeper correction in gold—particularly if macro headwinds fade—they believe strong structural demand, especially from central banks and defensive investors, makes a 40% crash unlikely. Gold may face volatility, but its role as a portfolio hedge remains compelling.