Gold closed Friday at $4,103.70 an ounce, a 1.54 percent daily gain, yet the yellow metal remains 27 percent below its January record of $5,627. On a monthly basis, bullion has shed nearly eight percent. The divergence between a weakening paper price and red-hot physical appetite is growing harder to ignore.
The Federal Reserve’s preferred inflation gauge, the PCE price index, rose to 4.1 percent in May — the first time it has breached the four-percent threshold since April 2023. Core PCE climbed to 3.4 percent. Minneapolis Fed President Neel Kashkari warned that rate cuts for 2026 are off the table, adding that another hike is moving closer. Markets now assign a 63 percent probability to a September rate increase. Higher real yields raise the opportunity cost of holding non-yielding gold, and the recent sell-off reflects that calculus.
But those headwinds are doing little to slow institutional buyers. Central banks added a net 244 tonnes in the first quarter and have accumulated roughly 850 tonnes so far this year. A World Gold Council survey of 76 central banks found that 89 percent expect global gold reserves to rise, and a record 45 percent plan to increase their own holdings over the next twelve months. The BRICS bloc, in particular, continues to accelerate its diversification away from the dollar.
The physical market’s resolve shows up in COMEX delivery data too. On June 26, delivery notices for 100-ounce gold futures stood at 40,841 contracts. While that is below the peaks seen around the turn of the year, net new contracts for immediate delivery hit the highest level of 2024 — and they did so as the price was sliding. Buyers of physical metal are undeterred by the pullback.
Should investors sell immediately? Or is it worth buying Gold?
Technically, gold is skating close to the edge. The relative strength index sits at 37.3, signaling oversold conditions, but a death cross in June has reinforced downward momentum. If the metal breaks decisively below $4,000, analysts see a potential slide to $3,600. On the supply side, Ghana from July will require mining companies to sell one-third of their production directly to the state, a move that could tighten free-market availability in the short term.
Meanwhile, Asia is quietly laying the groundwork for a structural shift in the gold market. Hong Kong will launch a state-backed gold clearing system in July 2026, with at least 11 banks — several of which already import 400-ounce London Good Delivery bars. Singapore plans to follow with its own OTC clearing system by year-end, with JPMorgan and Deutsche Bank confirmed as participants. Both initiatives aim to challenge London’s dominance and shift the global center of gravity toward a region where investor demand is rising fastest.
The next flashpoint comes on July 2, when U.S. nonfarm payrolls data is released. A strong reading would strengthen the Fed hawks’ hand and add further pressure to gold. At the same time, Ghana’s new sales rule takes effect July 1, testing how much strain physical supply chains can absorb. For now, the market remains a tale of two realities: a paper gold price under the thumb of inflation data, and a physical market that keeps buying the dip.
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