Galaxy Securities says 1H26 Middle East conflict pushed oil and inflation
expectations higher, flipping market expectations from Fed cuts to a possible
in‑year hike and, together with liquidity realization, caused gold to spike then
come under pressure. Markets have largely priced a single Fed hike in H2 into
gold. If H2 sees easing of the Middle East conflict and any Hormuz blockade, oil
and inflation would likely fall and market expectations for marginal Fed easing
could re-emerge, supporting a renewed gold rally. Separately, escalating strains
in global order and US debt/credit risks are accelerating de-dollarization and a
re‑anchoring of the global credit/currency system, prompting central banks,
institutions and households to increase gold allocations; Galaxy says this
supports a medium‑to‑long‑term uptrend in bullion and higher valuations for
China’s A‑share gold sector.
