Gold Bounces Back from $4,030 Lows as Central Bank Hoarding Clashes with Death Cross and Rising Rate Fears

Gold rebounds 1.21% intraday after hitting $4,030, but death cross and Fed's hawkish tone under Warsh cap gains; ETF outflows contrast with central bank buying.

Gold prices staged a sharp intraday rebound on Thursday, climbing 1.21% to $4,136.90 per ounce after plunging to $4,030 – the weakest level since July 2. The recovery, however, did little to erase the broader bearish signals flashing across the market. Earlier in the session, the metal had been trading near $4,043.60, extending a weekly decline of 2.25% and dragging its year-to-date loss to 6.87%.

The revival came despite the formation of a so-called death cross, where the 50-day moving average has crossed below the 200-day moving average – a pattern often interpreted by chartists as a warning of sustained weakness. As of the latest reading, gold was trading 5.46% below its 50-day average of $4,375.62 and 8.86% below its 200-day average. Earlier in the week those gaps had been wider, at 7.78% and 10.91% respectively, underscoring how volatile the sell-off has been. The relative strength index, which had dipped to 38.4 – edging toward oversold territory – recovered to 44.6, a neutral reading that offers little directional clarity. Annualized 30-day volatility remains elevated at 27.19%.

The headwinds are largely rooted in monetary policy. Minutes from the Federal Reserve’s June meeting, released Wednesday, revealed a more hawkish stance under Chair Kevin Warsh, with the committee determined to keep interest rates elevated until inflation is decisively under control. Some members even discussed further tightening. The market is now pricing in at least one rate hike by the end of 2026, a stark reversal from the easing hopes that buoyed gold earlier this year. May’s U.S. consumer price index came in at 4.2%, the highest in three years, driven in large part by persistently high energy costs.

Geopolitical turmoil has added another layer of complexity. President Donald Trump declared an end to the interim peace agreement with Iran, and during a NATO summit in Ankara he threatened additional strikes. This escalation comes alongside a blockade of the Strait of Hormuz that has been disrupting oil and gas shipments since late February. Crude prices spiked more than 5% on the news, stoking fears that higher energy costs will feed through to inflation and keep the Fed on a restrictive path. Normally, such safe-haven tensions would lift gold, but the overriding concern about rising opportunity costs – gold pays no yield – has pushed investors toward cash and interest-bearing assets instead.

That shift is most visible in exchange-traded funds. More than $1 billion has flowed out of the world’s largest physically backed gold ETF, while its silver counterpart, SLV, has seen modest inflows – suggesting investors are rotating within the precious metals complex rather than exiting entirely. In direct contrast, central banks remain aggressive buyers. China’s central bank reported its largest monthly increase in gold reserves in over two and a half years for June, providing a counterweight to the ETF exodus.

Despite the near-term pressure, major institutions see a brighter path ahead. JPMorgan maintains a $4,500 target for the fourth quarter, while Goldman Sachs forecasts $4,900 by year-end. The World Gold Council, in its Gold Outlook 2026, sketches a scenario in which a mild economic slowdown and falling interest rates could lift the price by 5% to 15%. For now, though, gold is caught between a hawkish Fed, stubborn inflation, and the structural support of official-sector buying – a tension that keeps the death cross firmly in focus.