Morgan Stanley has a blunt message for gold investors

Morgan Stanley just unpacked the gold trade in a direct, no-nonsense way.

Investors are misreading gold’s recent moves, since the current headwinds are different this time, Morgan Stanley Metals and Mining Commodity Strategist Amy Gower said in a recent Bloomberg interview. 

Though gold isn’t a broken story, the near-term setup isn’t as conducive as it was earlier in the year.

At this time, we’re seeing gold behave unpredictably, which is common for the safe-haven metal during periods of shock. 

Gower highlighted that during Covid and at the start of the Russia-Ukraine war, gold typically falls first as liquidity “works against it.”

However, this time, things are different.

The macro backdrop has shifted swiftly, and markets are pricing in an environment where rates could jump or even rise, in a sensational twist compared to just a few months ago.

At the time of writing, Reuters reported that spot gold was trading at $4,678.36 per ounce. Taking that as a reference point, here’s how the safe-haven metal has fared over the past few months, compared to historical daily spot closes from GoldPrice.org.

YTD:+7.8% (+$338.71/oz) versus the Dec. 31, 2025, close of $4,339.65/oz.3 months:+8.3% (+$356.88/oz) versus the Jan. 1, 2026 close of $4,321.48/oz.6 months:+21.1% (+$815.89/oz) versus the Oct. 1, 2025 close of $3,862.47/oz.

Since the Iran war began on Feb. 28, 2026, gold has moved in the opposite direction for a classic safe-haven trade.

According to Reuters reporting on March 26, since the war began, gold has lost 17% of its value (and about 10.5% based on its latest price).

It also posted the steepest decline in October 2008, with spot gold tanking 11.8% in March.

Here’s a link to track live gold prices on Investing.com.

Nevertheless, Gower isn’t backing away from the broader thesis that’s been developing for several months. So although its path higher might stay volatile, the shiny yellow metal’s role remains firmly in place. 

Why gold is losing momentum

Gold’s recent slide is happening in line with a broader macro reset where inflationary pressures and interest rate expectations have been front and center.

At the same time, the stock market has shown relative resilience, and with lower expectations than before, April is poised to be a strong month for Wall Street.

The big shift was driven by energy. Oil prices jumped above $100 per barrel, stoking inflationary pressures that could persist. Consequently, expectations for Fed cuts have faded away.
In fact, the latest CME-fed futures data showed the market pricing in a 97.9% chance of no change at the April 29 Fed meeting and an 87.4% chance of no change at the June 17 Fed meeting.
Higher-for-longer rate expectations usually pose a direct headwind. Gold doesn’t yield income; higher Treasury yields make holding bullion much less attractive. Since the start of the Iran war, the 10-year Treasury yield jumped from 3.96% to 4.39%.Meanwhile, stocks have held up better. Despite the choppy market, investors leaned into stocks, believing corporate earnings can withstand higher rates. For context, theS&P 500dropped 5.1% in March, according to MarketWatch, while gold dropped over 13%.

A shifting macro backdrop is forcing investors to rethink how gold behaves.

Photo by OsakaWayne Studios on Getty Images

Wall Street’s targets on goldGoldman Sachs reiterated $5,400/oz. for end-2026.JP Morgan sees $6,300/oz. by end-2026, per Reuters.UBS sees $6,200/oz. for March, June, and September 2026, and $5,900/oz. by the end of 2026, according to Reuters.Deutsche Bank sees $6,000/oz. in 2026, Investing.com noted.Société Générale sees $6,000/oz. by end-2026, Reuters reported.Commerzbank lifted its year-end forecast to $5,000/oz, per Reuters.JPMorgan breaks down the gold trade

Gower’s discussion on Bloomberg was less about a breaking of gold’s long-term bull case and more about how messy things can get in the mindset of a macro shock.

She argued that it is “not unusual to see gold initially pull back” during crises, because the king metal’s liquidity usually “works against it.” 

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In that setup, it’s only natural for investors to look for assets they can sell the quickest, and gold is universally known as “your most liquid asset” for freeing up cash in meeting margin calls, or rotating elsewhere. 

However, for Gower, this particular selloff seems different.

For her, the bigger issue at hand is that the market went from pricing in rate cuts to rate hikes, while the dollar continues “creeping higher,” too. 

That combo matters a ton because gold is sensitive to real rates and dollar strength. Also, she linked the recent choppiness to “technical selling,” with gold bouncing off the 200-day moving average.

Investor takeaway on gold

The important takeaway for investors is that gold’s structural case is still compelling, especially with a long-term time horizon. However, real-asset demand has shifted and is linked to fiat-currency worries.

The big risk here is that the trend of central banks and ETFs that scooped up a ton of gold over the past couple of years might reverse if the Fed stays hawkish.

For perspective, central banks bought 863 tonnes of gold in 2025, according to the World Gold Council. While that marked a slower pace than 2024, it was still one of the largest official-sector buying years on record.

From a technical standpoint, per Investing.com, gold prices are hovering above the 50-day moving average around the upper $4,500s and the 200-day near the low $4,500s.

Gold has bounced, but for it to confirm the uptrend, it needs to stay comfortably in the $4,700 area to keep that recovery intact. So, a slide back toward the upper $4,500s to about $4,600 would mean that the rebound is apparently losing steam.

Related: Goldman Sachs sends surprise message to stock market investors

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