Gold Extends Slide to Three Days as Hawkish Fed Comments Trump Central Bank Buying and Geopolitical Risks

Bullion’s price action continues to defy conventional logic. Despite escalating tensions between the US and Iran, fresh central bank purchases, and India’s repatriation of over 168 tonnes of gold, the precious metal has slumped for a third straight session. Spot gold was trading at $4,118.80 per ounce on Friday, down 0.33% on the day and 1.64% lower on the week. The monthly picture offers a modest reprieve — a 0.60% gain — but the metal remains 5.14% in the red since the start of the year.

What is weighing on the market is not geopolitics but the US Federal Reserve. A chorus of hawkish voices has unnerved traders. Chicago Fed President Austan Goolsbee warned that expectations around the AI boom could keep inflation elevated. Governor Lisa Cook signaled she would back a rate hike if price pressures do not abate, while Vice Chair Philip Jefferson and Minneapolis Fed President Neel Kashkari also highlighted upside inflation risks. The minutes from the Fed’s latest meeting revealed that nine of 18 committee members are considering raising rates again before year-end, and markets now price a 65% probability of a move in September.

Meanwhile, official-sector buyers are charging into the dip at a pace that recalls the aftermath of the 2008 financial crisis. China added roughly 480,000 ounces — about 15 tonnes — in June, its largest monthly purchase since October 2023 and the twentieth consecutive month of reserve increases. Beijing’s total gold holdings now stand at 2,346 tonnes. Poland’s central bank has snapped up 82 tonnes so far in 2026, with around 19 tonnes acquired in June alone, pushing its reserves to 632.4 tonnes. Governor Adam Glapiński has made clear that Warsaw intends to keep buying when prices fall, targeting a 700-tonne stockpile.

The buying spree extends beyond the usual suspects. India has repatriated more than 168 tonnes of gold from overseas vaults in the current fiscal year, slashing the share held abroad from 55% to 22%. France pulled 129 tonnes from the New York Fed’s vault, leaving it with zero gold stored there. The New York Fed’s total holdings have shrunk to roughly 6,330 tonnes, down from 13,000 tonnes in 1973. Across the globe, 59% of central banks now store their gold domestically, up from 41% in 2024, according to the World Gold Council.

Should investors sell immediately? Or is it worth buying Gold?

Yet the price keeps sliding. From its 52-week high of $5,626.80 reached on January 29, gold has now retreated 26.80%. The distance to the 52-week low of $3,901.30 from October 28 has shrunk to just 5.58%. The technical backdrop adds to the bearish narrative: the 50-day moving average sits at $4,365.31 and the 200-day average at $4,539.07, both well above current levels. The relative strength index of 43.4 points to neutral-to-weak momentum, while the annualized 30-day volatility of 27.01% underscores the jittery environment.

Analyst forecasts have become a study in contrasts, reflecting the uncertainty gripping the market. HSBC slashed its 2026 outlook to $4,560 per ounce, citing a strong US dollar. Bank of America followed with a cut to $4,360. Deutsche Bank is even more bearish at $4,000. On the other end of the spectrum, UBS sees $6,200 as achievable over the long haul, and Goldman Sachs targets $4,900 by year-end. JPMorgan trimmed its target from $5,708 to $5,243, while DBS has turned increasingly bullish, forecasting $5,000 for the third quarter of 2026, $5,300 for the fourth, and $5,600 and $5,900 for the first two quarters of 2027. Metals Focus expects a summer consolidation phase before a meaningful recovery, underpinned by US monetary policy, geopolitical friction, and persistent AI-related inflation.

The divergence between institutional and retail demand is widening. In India, jewelers are offering discounts of up to $19 per ounce to lure buyers — a sign that consumer appetite is wilting under the volatility. That contrasts starkly with the World Gold Council’s survey, which found that 45% of central banks plan to increase their gold reserves further.

The next big test arrives next week when the US releases consumer and producer price data. If inflation prints come in hot, a rate hike in September will look all but certain, and the selling pressure on gold could intensify. For now, the metal remains caught between a wall of Fed hawkishness and a flood of central bank buying — a tug-of-war that shows no signs of resolution.