Gold at a Crosswinds Moment: Iran Talks, Hong Kong Clearing, and the Fed Tightrope

Gold's calm belies macro shifts: Iran nuclear talks may ease oil prices and inflation, while Fed holds rates steady. Technicals show neutral RSI, ETF outflows cap upside.

Gold’s lull at the start of the week is less about the metal’s usual crisis-playbook and more about a tangle of macro and market-infrastructure shifts that could influence its price discovery in the months ahead. A potential thaw in Middle East energy tensions, paired with a bold move to restructure how Asia clears and settles bullion, leaves traders juggling two divergent forces: oil’s path and a hawkish-to-hold Fed trajectory.

On the oil front, US officials say talks with Iran over a possible nuclear accord are progressing, with a final green light unlikely to arrive within hours and days rather than minutes. President Trump has signaled on social media that he does not want to rush any agreement. If a deal materializes and the Strait of Hormuz opens more reliably, crude prices could give back some upside pressure — a mechanism goldwatchers still eye closely because cheaper energy can ease inflation expectations and, by extension, curb the real-yields surge that often tempers gold’s appeal.

The gold market is, however, hinging on the bond of oil, inflation, and the Fed. Rising energy costs tend to keep inflation expectations elevated, which can delay or deepen the Fed’s path of easing. Conversely, a softer oil backdrop could relieve some inflation risk, potentially lifting gold’s ceiling if real yields retreat. For now, the market is laser-focused on the Fed’s next moves. CME data show the odds of a June rate cut to the 3.25–3.50% band at just 2.6%, while a broad majority—97.4% of participants—still price in no change in rates for the moment. That stance helps cap gold’s upside in the near term even as energy volatility persists.

Gold settled Friday at $4,521.00 per ounce. On a weekly basis, the metal’s down 1.09%, with a 4.26% retreat for the month; year-to-date, gold remains up about 4.13%. The technical picture remains delicate: the price sits 3.18% below its 50-day moving average, which stands at $4,669.36, and sits 17.05% beneath the 52-week high. The relative strength index is neutral, at 49.8, indicating neither exuberance nor a clear oversold condition.

The ETF lens adds complexity to the narrative. After a stretch of inflows, gold-backed exchange-traded funds turned to outflows last week—the first retreat since early April—coinciding with a run-up in West Texas Intermediate above $100 per barrel and a routing of roughly 25 Iranian-flagged ships. The shifting flows underscore how sensitive near-term positioning remains to geopolitical signals and energy swings. In addition to oil dynamics, profit-taking and repositioning in the ETF complex temper the immediate upside for bullion.

In a separate note, JPMorgan Chase trimmed its forecast for the average gold price in 2026, citing weaker near-term momentum from investors. The bank does expect a comeback later in the year, aided by central-bank purchases and potential ETF inflows, but the immediate driver remains the oil-fed inflation calculus and the Fed’s rate path rather than purely bullion-specific demand.

Beyond the cyclical cues, structural demand shifts are also part of the price script. In the first quarter, demand for gold in technology applications rose 1% to 82 tonnes as AI infrastructure expansion remains a key demand pillar. That underpinning lends a floor to the market even as cyclical headwinds test momentum.

A separate, big-picture development is unfolding in Asia. Hong Kong is moving to erect a state-backed clearing framework modeled on London’s core system for unallocated bullion accounts. The Hong Kong Precious Metals Central Clearing Co. plans to start operating by July, with an eleven-bank oversight committee that includes ICBC and Bank of China, along with international players such as HSBC, JPMorgan Chase, and UBS. The aim is to speed, simplify, and deepen liquidity in bullion settlements, positioning Hong Kong not merely as a conduit but as a price-forming node.

Crucially, the new regime goes hand in hand with a substantial physical-ownership expansion. Hong Kong intends to raise vault capacity from about 200 tonnes today to more than 2,000 tonnes within three years and is weighing tax incentives to bolster local trading activity. A Tai Po refinery project has a stated investment of $150 million, and there is a cooperation framework with the Shanghai Gold Exchange. Taken together, these moves are designed to knit an Asia-centered, RMB-linked bullion market more closely to price formation and financial flows in the region, while maintaining ties to Western market architecture through the existing London clearing ecosystem, of which HSBC, JPMorgan Chase, and UBS are co-owners and operators.

The macro backdrop remains a balancing act. Fed Governor Christopher Waller cautioned that the next move in rates could swing either up or down, influenced by the energy shock and its inflationary spillover. The market’s cadence ascribes a higher likelihood that 2026 won’t feature broad rate cuts, with December’s FOMC meeting showing a 43% probability for a 25 basis-point hike, per CME FedWatch. In the meantime, US consumer confidence cooled in May, with the University of Michigan index at 44.8, down from 49.8 in April. One-year inflation expectations rose to 4.8%, while the long-run figure stood at 3.9%.

Amid these crosscurrents, gold’s near-term fate continues to ride energy prices and the Federal Reserve’s guidance. The Iran talks, if successful, could soften the inflation choke and nudge real yields lower, providing a modicum of relief for the metal. If the talks falter, the market would likely re-anchor on energy costs and the higher-for-longer stance that real yields imply. At the same time, Hong Kong’s clearing initiative adds a structural tailwind to Asia’s bullion ecosystem, potentially reshaping price formation in a market already buoyed by a growing RMB footprint and regional demand. Taken together, the metal navigates a landscape where oil, inflation expectations, and financial-market architecture are as decisive as any pure bullion impulse.