Gold opened the week near $4,060 per ounce, extending a slide that has wiped 27% from the January all-time high of $5,626.80. The metal finds itself in a peculiar bind: escalating US-Iran tensions and a fragile ceasefire around the Strait of Hormuz normally trigger a flight to safety, but this time the same geopolitical heat is stoking inflation fears that keep the Federal Reserve on a tightening path. Higher oil prices feed into core inflation readings, and Fed Governor Kevin Warsh has reiterated a restrictive stance, with the central bank raising its core inflation forecasts in mid-June. Three rate hikes are now priced into the market for this year, and the probability of a first move in September stands at roughly 62%.
On the COMEX, however, physical demand tells a different story. Traders filed 40,841 delivery notices for the current contract — a new annual high that translates into 127 tonnes of gold heading for physical settlement. Open interest rose 5.5% in a week to 363,192 contracts, while large speculators have begun trimming their short positions. That physical squeeze is a counterweight to the macro headwinds pressing on paper prices.
The central bank picture reinforces that support. A World Gold Council survey found 45% of central banks plan to increase their gold reserves over the next twelve months, a record proportion. In the first quarter alone, central banks added 244 tonnes, and global official holdings have already climbed to a 50-year peak of more than 36,000 tonnes. State buyers are using the lower spot price to diversify reserves, and that structural demand is helping to floor the sell-off.
Against that macro backdrop, Goldman Sachs has cast its vote with the bears. The bank slashed its year-end gold forecast by $500 to $4,900 per ounce, explicitly citing the Fed’s refusal to cut rates in 2026. The move underscores the central tension: gold offers no yield, and every percentage point rise in Treasury yields makes bullion more expensive to hold. The PCE inflation reading for May came in at 4.1%, with the Fed’s June meeting minutes showing nine of 18 officials see a rate increase as possible this year.
Should investors sell immediately? Or is it worth buying Gold?
The market’s attention now turns to a compressed week of data that could tilt the balance. The US jobs report — non-farm payrolls — lands on Thursday, a day early because markets are closed Friday for Independence Day. Alongside it come JOLTS job openings, the ISM manufacturing index for June, and the unemployment rate. Simultaneously, Governor Warsh speaks at the ECB’s annual Sintra forum, where every word will be parsed for policy clues. A weak jobs number could spark a rebound toward $4,200, while a robust report would pile more pressure on the metal.
Technically, gold has already broken below its 200-day moving average, and the relative strength index sits at 37.3 — squarely in oversold territory. The $4,000 level has been tested multiple times in recent sessions and is holding for now, but chart watchers caution that a break below that psychological floor could accelerate selling.
Adding a small but symbolic tailwind, Florida’s new law making gold and silver coins legal tender from July 1, with tax exemptions, highlights deepening political interest in physical metal. For the moment, the immediate catalyst remains the jobs data on Thursday and the subsequent reaction in the dollar and bond markets. Gold is walking a tightrope between a physical demand floor and a monetary policy ceiling — and the next few days will decide whether $4,000 holds as a springboard or becomes a trapdoor.
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