Gold Caught Between Central Bank Appetite and Hawkish Fed Headwinds
23.05.2026 - 17:32:52 | boerse-global.de
Gold is enduring a peculiar split personality. On one hand, official-sector demand remains robust — the World Gold Council tallied 244 tonnes of central bank purchases in the first quarter, up 3% year-on-year. On the other, the metal slumped for a second consecutive week, closing Friday at $4,510.50 an ounce, a 4.69% monthly decline that pushed it decisively below its 50-day moving average near $4,669.
The culprit behind the price weakness is a familiar one: the Federal Reserve. Fed Governor Christopher Waller signaled on Friday that maintaining the current accommodative stance is no longer appropriate, and markets now price roughly a 55% probability of a rate hike by October 2026. That hawkish repricing has sent US Treasury yields climbing and the dollar strengthening — a double blow for non-yielding gold, which becomes more expensive for overseas buyers and faces higher opportunity costs against interest-bearing assets.
Geopolitical uncertainty in the Middle East, rather than boosting haven demand, is exacerbating the pressure. US Secretary of State Marco Rubio said Washington and Tehran remain far from a final deal, though he also noted “slight progress” in the nuclear talks — a characterisation swiftly denied by Iranian foreign ministry spokesman Esmail Baghaei. The resulting diplomatic limbo is keeping oil prices elevated near four-year highs, stoking inflation fears that paradoxically hurt gold by reinforcing rate hike expectations rather than burnishing the metal’s traditional inflation-hedge credentials.
Should investors sell immediately? Or is it worth buying Gold?
The macro backdrop offers little relief. The University of Michigan consumer sentiment index plunged to a record low of 44.8 in May, while short-term inflation expectations rose to 4.8% and long-term expectations hit 3.9%. Such figures leave the Fed with scant room to ease and keep rate cuts off the table entirely for 2026. The 10-year Treasury yield did ease slightly to 4.56% — a weekly low — but remains well above levels that would ease pressure on gold.
Yet the structural support from central banks cannot be ignored. Goldman Sachs recently raised its estimate for monthly official-sector purchases from 50 to 60 tonnes, after UK trade data revealed systematic underreporting of vault outflows from London since August 2025. The one notable exception is Russia, whose central bank sold more than 12 tonnes for the fourth consecutive month in April.
Traders now look to Friday’s release of the PCE deflator, the Fed’s preferred inflation gauge. A hotter-than-expected reading could trigger a test of the psychologically important $4,500 support level. But if central bank buying continues to absorb supply, some analysts see significant upside ahead. Goldman Sachs maintains its year-end target of $5,400 per ounce, while J.P. Morgan — despite a lowered average forecast — still expects a recovery toward $6,000 by year-end, representing roughly 33% upside from current levels. Whether that materialises hinges critically on whether the Fed shifts course earlier than currently anticipated in 2027.
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