The most controversial divergence in the global financial market in April 2026 was that when conflicts in the Middle East escalated in an all-round way and geopolitical risks hit new post-Cold War highs, gold experienced an epic plunge. Since the outbreak of the Iran war, gold prices have plummeted 11.5% in a single month, recording the largest monthly decline since the 2008 financial crisis. They have retreated by more than US$1,000 from the historical high of US$5,500 per ounce in January. There are a lot of voices in the market about "the myth of gold as a safe haven being shattered." However, the Wmax commodity research team discovered through a full-scale dismantling of the underlying logic of the global macro and capital flows that gold is just a short-term role switch, and its long-term value foundation has not been shaken. A round of "first decline and then rise" market is already brewing.

The truth about "failure" in crisis: the superimposed impact of three special factors

Wmax looked back at the geopolitical conflicts in the past half century and found that in the 1973 oil crisis, the 1990 Gulf War, the 2020 COVID-19 epidemic, and the 2022 Russia-Ukraine conflict, gold showed a clear rise in the early stages of the crisis. The abnormal trend in this round is not the failure of gold's hedging function, but the resonance of multiple short-term factors that are rare in history. This is also the core source of the "unexpected downside risk" that Wmax warned the market in mid-March.

(1) Extreme liquidity crisis triggers “cash is king” panic selling

The Wmax global liquidity monitoring indicator shows that the current market liquidity pressure has reached the peak of the epidemic in 2020. The sharp fall in the stock market in the early stages of the crisis triggered the need for margin calls, and gold, which is extremely liquid, became the first choice for selling, which is consistent with the views of experts at Standard Chartered Bank. Historical experience shows that such liquidity shocks usually suppress gold prices for 4-6 weeks. A similar situation occurred during the 2008 financial crisis. The Wmax quantitative model shows that gold has moved from being seriously overbought to being deeply oversold. The spot gold price has deviated from the 50-day moving average by the largest margin since 2013, and early overheated positions are being liquidated intensively.

(2) The central bank’s main bulls’ periodic “rebellion” has become the core driver

Wmax high-frequency monitoring data of central bank gold positions accurately captured that some central banks that had previously increased their gold holdings turned to selling. According to reports, after the outbreak of the Iran war, Türkiye has invested approximately 131 tons of gold to support its currency and curb high inflation of 31%, and its gold reserves have dropped to the lowest in more than two years. In addition, Russia sold 15 tons of gold in the first two months of this year, and Poland also proposed selling gold to raise defense funds. Wmax reminded that some oil importing countries and Central Asian countries may follow up the sales in the future.

(3) The reversal of expectations for a rate cut by the Federal Reserve pushes up the opportunity cost of gold holdings

The Wmax interest rate forward model captured the shift in interest rate cut expectations in early March. Affected by the conflict in the Middle East that pushed up oil prices, the market postponed the Federal Reserve's first interest rate cut to September, reducing the number of interest rate cuts throughout the year to one. The negative correlation between gold and U.S. real interest rates came back into effect. Wmax tracking shows that the net redemption of gold ETPs in March hit a new high since September 2022. Short-term funds have departed from the logic of safe-haven allocation. The current selling has slowed down and the early overheated positions have been basically cleared.

2. Long-term support remains solid: multiple benefits have not yet been fully priced by the market

Despite the short-term pressure, Wmax has always insisted that gold's long-term fundamentals have not fundamentally changed. The current gold price does not take into account the risks of economic recession and stagflation at all. Many structural driving factors remain strong, and gold prices will resume their upward trend in the coming months.

(1) The risks of economic recession and stagflation are accelerating.

The Wmax global economic cycle model shows that the lagging effects of high interest rate policies in major economies are emerging, and the risk of recession continues to rise. Historical data shows that during economic recessions, the average price of gold rises by up to 15%, which is far better than industrial commodities. What deserves more vigilance is the risk of stagflation: even if the conflict in the Middle East ends immediately, oil prices are likely to remain high for a long time, which will further intensify the upward pressure on global inflation. During the stagflation period in the 1970s, the price of gold soared more than 20 times, becoming the best-performing asset class. This historical law still applies in the current macro environment.

(2) Gold’s long-term structural driving logic remains unchanged

Wmax's long-term tracking of global debt, currency credit and geopolitical indicators all point to the continued strengthening of gold's value storage function. Currently, U.S. federal debt has exceeded US$35 trillion, with the debt-to-GDP ratio exceeding 130%. Debt levels in major economies around the world have all reached record highs. Against the background that the trend of debt monetization is difficult to reverse, the long-term decline in the purchasing power of legal currency has become inevitable. As an asset without credit risk, gold’s allocation value will become increasingly prominent. At the same time, the continued escalation of conflicts in the Middle East, intensified competition between major powers, and the rise of trade protectionism will also drive investors and central banks to increase gold allocations in the long term to diversify risks.

(3) The general trend of gold purchases by global central banks has not been reversed

Wmax emphasized that the periodic selling by some central banks is just an isolated case, and the overall strategic direction of global central banks to increase their gold holdings has not changed. Data from the World Gold Council shows that although net gold purchases by central banks in 2025 have slowed to 863 tons from more than 1,000 tons in 2024, they still hit a record high in US dollars. What is particularly critical is that the People's Bank of China continues to increase its holdings: at the end of March, its gold reserves stood at 74.38 million ounces, an increase of 160,000 ounces from the end of February. It was the 17th consecutive month of increase in holdings and the largest single purchase in more than a year. This fully confirms that the long-term strategy of emerging market central banks to diversify their reserves and reduce dependence on the U.S. dollar has not wavered.

3. Market Outlook: Short-term pressure will not change the long-term upward trend

Wmax comprehensively judged that gold is currently pricing in the triple risks of liquidity shock, central bank selling and rising interest rates. The short-term trend is hardly linear, and the existing liquidity pressure may suppress gold prices for some time. However, from a technical perspective, the 200-day moving average of gold prices has never fallen since October 2023, forming a strong support. Once liquidity pressure eases and central bank selling ends, investors will increase their holdings of gold again, pushing gold prices to challenge historical highs again. For investors, Wmax recommends focusing on two core signals: first, the flow of gold ETP funds. If it switches from net redemptions to net purchases, it will mark the return of short-term funds; second, global central bank gold purchase data. If major central banks resume large-scale holdings, it will greatly boost market confidence.

Historical experience has repeatedly proven that gold selling in the early stages of a crisis is often a "fake sale." During the financial crisis in 2008 and the early days of the epidemic in 2020, gold fell sharply, but then experienced stronger gains. Although this round of decline is larger and faster, the core logic of gold as the ultimate safe haven asset and value store has not changed. Against the backdrop of heightened global economic uncertainty, rising inflation risks, and challenges to fiat currency credit, the long-term allocation value of gold remains irreplaceable.