BCA Research Sees Buying Opportunity in Gold as Headwinds From Real Rates, Dollar Ease

BCA Research is advising clients that the recent sharp selloff in gold is running out of steam, arguing that easing tactical headwinds now make a compelling case for buying the precious metal.

In a note to clients, the firm highlighted that gold has slumped 26% since reaching its all-time high on January 29, a period during which it failed to act as a safe haven during the inflationary shock of the Iran war.

Real Rates, Not Inflation, Seen as Key Driver

Central to BCA's analysis is the argument that real interest rates—not inflation—are the primary driver of gold prices. The firm described gold's reputation as a simple inflation hedge as "overstated."

According to BCA, the worst of the pressure from rising real rates is likely in the past. The firm also anticipates that the U.S. dollar will shift from being a significant headwind to a potential tailwind for the yellow metal, further improving its outlook.

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Market Dynamics and Structural Support

BCA noted that the bull market for gold has progressed through several phases, from a surge in central bank demand in late 2022 to an ETF-driven rally in 2025. The current phase, according to the firm, is one where real rates and the dollar have "reasserted themselves as the dominant drivers."

While central bank buying was a major catalyst for gains, BCA now believes this demand provides a price floor rather than a driver for further appreciation. However, the firm maintains that ongoing geopolitical tensions and global efforts toward reserve diversification should continue to offer long-term structural support for gold, both through direct central bank purchases and indirectly by potentially weakening the U.S. dollar.