Gold prices are facing a potential sharp downturn in the near term, according to commodity strategists, with a possible slide to $4,200 per ounce before a significant rally takes hold in the coming years.

The hawkish stance from Federal Reserve Chair Kevin Warsh at the Jackson Hole global central bank symposium is creating substantial downward pressure on international gold prices in the short term, notes Bart Melek, head of commodity research at TD Securities. Melek projects that gold could dip to $4,200 per ounce within this year, but then rebound to $5,350 per ounce by the third quarter of 2027.

Melek indicates that international gold prices may decline further in the immediate future, as the Federal Reserve reiterates its commitment to price stability. This monetary policy stance is likely to keep bullion under pressure until market conditions shift.

However, analysts at Swiss bank Julius Baer see a potential tailwind for gold emerging from U.S. fiscal policy. The Treasury's expanded debt buyback program is intensifying discussions about intervention in the bond market, which could ultimately benefit gold prices. This decision helps cap long-term bond yields but simultaneously undermines the yield advantage that attracts global capital flows into the U.S., thereby accelerating the dollar's weakening trend.

Looking further ahead, overseas mining companies hold even more ambitious expectations for gold's future value. They argue that if increasing gold supply could provide a degree of credit backing for the global monetary system, international gold prices might multiply several times over from current levels.

Central bank demand for gold has become an increasingly important factor in the bullish outlook, with a growing number of central banks adjusting their reserve allocations by reducing dollar holdings and increasing gold positions.

From a technical analysis perspective, the upside target for gold bulls is to push international prices above $4,500 per ounce, while bears are aiming for a downside move that breaks gold below $4,390 per ounce. Ahead of this week's U.S. employment data release, gold prices are likely to maintain a wide-range, choppy trading pattern.