Both investment demand and the price of gold may have room to recover to the upside.

CICC: Gold Faces Headwinds from Inflation Fears, but Upside May Return

The US-Iran conflict has sent oil prices soaring, and inflation risks are now front and center. According to a CICC research note, markets are repricing the Fed's rate-cut path. That's putting pressure on gold ETFs, which saw heavy accumulation last year. Liquidity shocks through futures and options markets are also adding fuel to the short-term pullback.

Middle East tensions may be approaching a critical juncture. Oil prices are at a crossroads, and gold's pricing focus could shift toward how supply shocks affect growth ("stagflation"). The rate-hike expectations already priced in may need a second look.

Looking ahead, CICC sees room for gold demand and prices to recover—whether through a post-de-escalation oil pullback, a return to easier monetary policy, or supply shocks that deepen recession fears and trigger gold's safe-haven appeal.