The precious metal finds itself trapped between two powerful and opposing forces. Central banks hoarded 244 tonnes of gold in the first quarter alone, pushing bullion’s share of global reserves to 27% — up from 20% a year earlier and the highest proportion since at least 1996. Yet the price keeps sliding, closing Friday at $4,172.90 per ounce, down nearly 8% over the past month and losing ground for three consecutive weeks.
The disconnect stems squarely from Washington. The Federal Reserve left its benchmark rate unchanged at the March meeting, but incoming Chair Kevin Warsh and a hawkish majority made clear that policy will tighten further. Nine of the 18 committee members now see at least one more rate hike by year-end, and the central bank has effectively shelved any hope of cuts in 2026. That sends the dollar surging to an eight-week high — a brutal headwind for an asset that offers no yield. The Greenback’s strength has crushed the appeal of bullion, pushing investors into income-bearing alternatives instead.
Adding to the pressure, geopolitical risk has receded. President Donald Trump signed an accord with Iran in Versailles, securing free passage through the Strait of Hormuz and calming fears of an oil-price shock. That has sapped demand for gold as a safe haven, removing a major pillar of support that had kept prices elevated earlier in the year.
Wall Street is taking notice. Goldman Sachs slashed its year-end bullion forecast by $500, citing the new reality that rate cuts are off the table. “The interest-rate backdrop demands a lower target,” the bank said. J.P. Morgan still sees a move to $6,000 by December, but the near-term narrative is dominated by the Fed’s tightening bias and a buoyant dollar.
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On the demand side, other factors are adding to the drag. India hiked import duties on gold sharply, a move designed to ease pressure on the rupee. While that could dent one of the world’s biggest buyers, the impact on a global market that consumes more than 4,000 tonnes annually remains modest.
Technical signals have turned cautionary. Bullion broke below its 200-day moving average, and the relative strength index sits at 35.4, edging into oversold territory without triggering a meaningful bounce. The next support level lies around $4,060, with the psychological $4,000 mark looming as a last line of defense. On the upside, resistance has formed in the $4,330–$4,355 zone.
For now, the market is waiting on a pivotal data release: the May personal consumption expenditures price index due Thursday, alongside manufacturing and services PMIs. A hotter-than-expected PCE reading would confirm the Fed’s restrictive stance and pile more pressure on gold. Until the central bank changes its tune, the metal’s best hope may be the very central banks that just can’t stop buying.
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