Setbacks in Gold’s Price: Opportunities or Warnings?
- Feb 4
- 3 min read
Updated: Feb 6
For strategic investors, every setback in the price of gold represents an opportunity to strengthen their exposure to an asset that has historically demonstrated resilience and long-term value.
According to the House View Briefcase (May 2025) of the Swiss investment bank UBS, the declines in the price of gold should be considered ideal moments to build or reinforce positions. This is based on a long-term vision backed by centuries of history.
An Economic Outlook That Favors Gold
In the short term, UBS points out two macroeconomic factors that support their optimism about the yearly performance of gold: 1) The expectation of a decline in real interest rates in the United States; and 2) the progressive weakness of the dollar.
When interest rates and real interest rates (i.e. nominal rates less inflation) fall, the opportunity cost of holding gold decreases, making the metal more attractive. And when the dollar loses strength, dollar-denominated assets like gold tend to appreciate, especially among international buyers. The combination of these two factors generates a favorable environment for gold to stay strong in the short and medium term, despite occasional corrections.
During the first half of 2025, the price of gold decreased slightly due to:
Optimism about the end of the US trade war.
Resilient economic data led the Federal Reserve to maintain a "patient" stance on rate cuts.
And more recently, on January 30, 2026, the price of gold experienced a sharp pullback of more than 12% in a single day, following a rapid appreciation of more than 25% during the first twenty-nine days of the month. This sharp decline was driven by two short-term events:
The forced liquidation of options and gold-linked derivatives by short-term investors, as a result of increased margin-trading requirements.
The nomination by President Trump of Kevin Warsh as the next Chair of the Federal Reserve, a development perceived as positive for accelerating the pace of interest-rate cuts in the United States, which could negatively impact the attractiveness of gold.
The events above do not alter the fundamental drivers behind the long-term growth in the price of gold. The UBS report highlights that Structural demand for gold remains strong, driven by fundamental factors, such as the increase in gold reserves by central banks and the search for protection against possible geopolitical tensions.
The Corrections are not Exit Signs, but Entrance Doors
The analysis of UBS is clear: "While gold may consolidate after recent gains, any period of falling prices should be used to gain exposure."
Instead of being tempted to sell at every adjustment in the price of gold, its long-term profitability is built with patience and tactical acquisition at the right moments.
Conclusion: Gold Rewards Long-Term Vision
While the price of gold may fluctuate in the short term, its structural strength persists. When its price falls, gold is not sending out warning signals, but extending an invitation: positioning ourselves strategically for the future.
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