The FOMO-fueled gold bubble may now be turning into a ‘mini-bust,’ analysts say

Core Viewpoint - Gold prices have declined significantly after reaching record highs earlier this year, raising concerns about the sustainability of the rally [1][3]. Demand Drivers - The surge in gold demand was attributed to a shift away from dollar-denominated assets and inflation concerns, but a more straightforward explanation suggests it was driven by a "fear of missing out" [2][3][6]. - Long-term demand trends, such as central banks increasing gold reserves and Chinese investors seeking gold as a safe asset post-real estate market crash, are expected to keep prices relatively high [4]. Market Outlook - Forecasts for gold prices have been revised lower, with expectations of a drop to $3,500 per ounce by the end of 2026, indicating a potential market bubble nearing its end [3]. - Despite the lower outlook, it is noted that this does not imply a complete collapse of gold prices, as historical demand trends will support higher prices [4]. Contrasting Views - Some analysts maintain bullish views on gold, citing its role as an inflation hedge and geopolitical factors, but recent market behavior suggests a shift towards a more cautious outlook [7][8]. - The attractiveness of gold may be further diminished by the performance of China's stock market, which could divert investment away from gold [5].