Gold Holds Near $4,750 as Markets Juggle a Fed Handover and a Critical CPI Print

Gold hovers as Kevin Warsh replaces Powell at the Fed, US inflation data looms, and Iran tensions keep energy markets on edge. Dollar strength and rate hike odds weigh, but safe-haven demand persists.

Gold is treading water around $4,750 as traders weigh a volatile mix: a change at the helm of the Federal Reserve, a looming US inflation print, and geopolitical tensions that keep energy markets on edge. After dipping to $4,699.07 on Monday – a drop of 0.36% triggered by fresh US-Iran rhetoric – the yellow metal has clawed back ground, supported by safe-haven flows even as the dollar gains.

The immediate catalyst for currency and rate expectations is the scheduled handover at the Fed on May 15, when Kevin Warsh replaces Jerome Powell. Markets initially strengthened the dollar on the news, betting on a more hawkish tilt. Yet Warsh is not seen as an unconditional advocate for rate cuts, and the market is already pricing in a discount for the waning independence of the central bank. That paradox is propping up gold, with investors seeking a refuge outside the US currency. At the same time, the interest-rate market sees barely any easing ahead: the implied probability of a cut in June to the 3.25%-3.50% range stands at just 4.2%, while a 25% chance of a rate hike by year-end has been priced in – a headwind for an asset that offers no yield.

All eyes are now on the April US consumer price index due later today. Economists expect a 0.6% month-on-month rise, pushing the annual rate to 3.7%. Core inflation is forecast at 0.3% month-on-month and 2.7% year-on-year. A hot reading would further dent hopes for policy loosening, while a cool number could provide a short-term boost to bullion. The wildcard remains energy: gasoline prices are expected to lift the headline figure, but the underlying driver is the Strait of Hormuz, which remains effectively closed. Washington and Tehran are still locked in diplomatic talks, though President Trump dismissed Iran’s latest offer to relocate part of its enriched uranium stockpile as “completely unacceptable.” The impasse keeps oil prices elevated and adds a stagflationary tint to the inflation picture.

Alongside the CPI release, diplomatic engagements are unfolding on multiple fronts. China’s Vice Premier He Lifeng and US Treasury Secretary Scott Bessent are holding trade talks in Seoul, ahead of Trump’s planned state visit to China. Any tangible progress could temporarily sap demand for safe havens, though the standoff over Iran and the blocked strait continue to underpin geopolitical risk premiums.

On the investment side, the picture is mixed but shifting. The World Gold Council reported global gold demand including OTC trades reached 1,230.9 tonnes in the first quarter, up 2% year-on-year, with bar and coin buying remaining robust. Western exchange-traded funds tell a different story: March saw a massive $12.7 billion outflow from North American gold ETFs, the heaviest monthly exodus in at least five years. However, April brought a reversal, with nearly $1 billion flowing back into US funds, and European investors are also increasing their allocations as a hedge against political risk and currency volatility.

Technically, the short-term picture is constructive. Bullion successfully tested the $4,600 support zone last week, with bulls defending that level convincingly. The immediate trigger sits around $4,744; a break below brings the 40-period moving average near $4,706 into focus, with the next serious floor at $4,495. On the upside, a cool CPI could push gold toward the next profit-taking target at $4,880. Conversely, a sustained move under $4,500 would open the door to a test of the 200-day moving average. The path forward hinges heavily on whether energy prices normalize – if they do, analysts see room for the rally to resume.