Gold’s Identity Crisis: A Dollar Squeeze, a Fed Power Struggle, and a Central Bank Buying Spree

Gold is caught in a rare contradiction. Geopolitical turmoil in the Middle East and a buying frenzy by the People’s Bank of China should be tailwinds. Yet the metal is sliding, closing Friday at $4,689.08 per troy ounce after touching an intraday low of $4,663. The culprit isn’t any single factor but a toxic cocktail of a surging dollar, climbing oil prices, and a Washington power struggle that has thrown the Federal Reserve’s leadership into uncharted territory.

The dollar index is hovering near 99 points, on track for a weekly gain of 0.4 percent — its first winning streak in nearly a month. That alone makes gold more expensive for non-U.S. buyers. But the dollar’s strength is only half the story. Brent crude has climbed to $106.3 a barrel, with West Texas Intermediate near $97, as tensions between the U.S. and Iran escalate and fears mount over a blockade of the Strait of Hormuz. Higher energy prices fan inflation expectations, which in turn keep the pressure on central banks to maintain — or even raise — interest rates. The yield on the 10-year U.S. Treasury note edged up to 4.34 percent on Friday, reinforcing the opportunity cost of holding non-yielding bullion.

The Warsh Effect Stalls in the Senate

The most disruptive force for gold this week has been political, not economic. Kevin Warsh, President Donald Trump’s nominee to replace Jerome Powell as Fed chair, is stuck in a confirmation deadlock. Senator Thom Tillis has blocked the vote, demanding an end to a criminal investigation into Powell. Trump has refused to drop the probe. With Powell’s term expiring on May 15, the standoff raises the specter of a historic legal battle: Powell has said he would stay on as a transitional chief if needed, while Trump has threatened to fire him. The confirmation process is now the most convoluted in the modern history of the U.S. central bank.

The uncertainty is weighing on sentiment. The CME FedWatch Tool assigns nearly 100 percent probability to a pause at the upcoming Federal Open Market Committee meeting on Tuesday and Wednesday. But the real focus will be on Powell’s tone. If he signals openness to rate cuts later this year despite rising oil prices, gold could find fresh footing. If he sticks to a patient stance, the downward pressure will persist.

Should investors sell immediately? Or is it worth buying Goldpreis LBMA?

Central Banks Dig In, But ETFs Tell a Different Story

One structural support remains intact: central bank buying. The People’s Bank of China added another 5 tonnes of gold in March, extending its buying streak to 17 consecutive months. Its official reserves now stand at a record 2,313 tonnes. Central banks in Poland and Uzbekistan have also been active buyers. This institutional demand provides a floor under prices, but it has done little to stem the current slide.

The divergence in investor behavior is stark. North American gold ETFs saw significant outflows in March, while Indian gold ETFs reported strong inflows in the first quarter of 2026. Chinese gold funds alone have attracted more than $8 billion in inflows this year. The gold market is no longer a monolithic asset class — it is a mirror of wildly different regional expectations.

Technicals Point to a Pivotal Zone

On the charts, gold is trading below its short-term moving averages. The 21-day line sits near $4,701, and the 100-day line at $4,741 — both acting as immediate resistance. The Relative Strength Index is oscillating between 44 and 47, indicating neither oversold nor overbought conditions, but rather a lack of conviction. The MACD signal remains negative, though it is flattening, suggesting that downward momentum is easing.

First support lies at $4,660, with a deeper floor at $4,601. A decisive move above $4,750 would be a clear bullish signal. Until then, the path of least resistance remains lower, caught between a strong dollar, a political crisis at the Fed, and inflation expectations that refuse to cool.