Gold Returns to Fundamentals as Liquidity Repricing Recedes

Gold Market Outlook: From Liquidity Surge to Fundamental Drivers

CITIC Securities released a research report analyzing gold price dynamics through 2025–2026, concluding that while gold remained firm in 2026 following its surge in 2025, the precious metal weakened relative to other assets such as stocks, copper, and oil. According to the report, the US-Iran conflict triggered a shift in market dynamics by impacting inflation expectations, causing the excess liquidity pricing that had driven gold prices upward since September to recede. As liquidity repricing retreats, gold is expected to return to its fundamental drivers: order restructuring and de-dollarization, both of which are catalyzing central bank gold purchases.

Liquidity Repricing and Market Dynamics

The CITIC Securities analysis identifies liquidity pricing as the primary driver of gold's sharp price increases since September. The report notes that geopolitical tensions—specifically the US-Iran conflict—disrupted this dynamic by affecting inflation expectations and triggering a pullback in liquidity-driven valuations. With excess liquidity pricing washed away by the conflict, the report suggests that future gold price increases may proceed at a more gradual pace.

Fundamental Drivers: Geopolitical Order and De-Dollarization

Beyond short-term liquidity dynamics, CITIC Securities identifies two structural factors supporting gold's fundamental value: order restructuring and de-dollarization trends. The report draws a parallel to the Russia-Ukraine conflict, which it characterizes as having "torn open the old global order," suggesting that geopolitical competition continues to advance. These dynamics are expected to sustain central bank demand for gold as nations seek to reduce dollar dependence and reposition reserves amid shifting global arrangements.

The report concludes that while gold's fundamentals remain intact, the repricing of excess liquidity suggests that the trajectory of gold price appreciation will be more measured going forward.