Central Banks' Record Gold Buying vs. India's Tariff Shock: Bullion Under Pressure from Yields and Inflation
Published on 05/19/2026 at 06:11 | Redaktion boerse-global.de
Gold is caught in a tug-of-war. While central banks around the world are loading up on bullion at a feverish pace, the metal has been sliding on a cocktail of rising US bond yields, stubborn inflation, and a surprise tariff hike in India. The result: a market that looks supported from the institutional side but is taking heat from almost every other direction.
The macro headwinds are fierce. US inflation climbed to 3.8% in April — the highest reading in three years — which has pushed the dollar higher and driven the yield on the benchmark 10-year Treasury note to around 4.63%, its strongest level since January 2025. That combination is toxic for gold, which offers no yield and becomes more expensive for non-dollar buyers when the greenback strengthens. The CME Group’s FedWatch tool now shows a 97.4% probability that the Federal Reserve will hold rates steady at its next meeting, with a cut priced at just 2.6%.
Against that backdrop, gold closed Monday at $4,571 an ounce, down roughly 6% over the past month. The decline accelerated after India announced it would jack up import duties on gold and silver from 6% to 15%, coming hard on the heels of Prime Minister Narendra Modi’s public appeal for citizens to curb gold purchases for a full year. India’s gold imports had been averaging 83 tonnes per month in early 2025, with first-quarter demand valued at around $25 billion. The tariff shock is a direct attempt to conserve foreign-exchange reserves as rising energy prices squeeze the external accounts.
Should investors sell immediately? Or is it worth buying Gold?
Yet even as short-term price action sags, the long-term demand story remains extraordinary. Goldman Sachs has sharply revised upward its forecast for central-bank purchases, now expecting average buying of roughly 60 tonnes per month through 2026. The analysts point to global uncertainty and the desire for more diversified currency reserves as the main drivers. First-quarter data already show a 17% quarter-on-quarter increase in central-bank demand, led by China and Poland. A survey of monetary authorities confirms the trend: 95% of central bankers expect global gold reserves to rise in 2026, and not a single institution plans to sell.
Geopolitical tensions in the Middle East — including heightened US-Iran rhetoric and attacks on energy infrastructure near the Strait of Hormuz — would normally provide a safe-haven lift. So far, however, the inflation-and-yields story is overpowering those risks. The market is waiting for the next catalyst: this week’s release of the FOMC meeting minutes and preliminary US PMI data. If those figures confirm sticky inflation and a resilient economy, gold could slide further. Any hint of easing price pressures, though, might help stabilize the recent pullback.
For now, gold is searching for direction. The macro headwinds are real, but as long as central banks continue their massive accumulation, the metal has a solid floor. A return to this year’s high of $5,450 would require a clear signal that US rates are heading lower — and that is not on the immediate horizon.
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