Gold’s $4,554 Reality Check: Record Demand Meets a Hawkish Fed and a Blockaded Strait

Gold hits 3-month low near $4,554 as Strait of Hormuz closure fuels inflation, halts rate cuts, and sparks record ETF outflows despite strong central bank buying.

Gold has tumbled to its weakest level since March, trading around $4,554 an ounce on the final day of April — a far cry from the all-time peak of $5,589 reached in late January. That marks a slide of nearly 19% in just three months, and the forces behind the sell-off are proving stubbornly resistant to the metal’s traditional safe-haven appeal.

The primary culprit is a toxic cocktail of geopolitics and monetary policy. The closure of the Strait of Hormuz has, according to the International Energy Agency, cut off roughly 20% of global oil shipments, triggering the largest supply shock in history. Brent crude has climbed back above $100 a barrel, reigniting inflation fears worldwide. That, in turn, has forced central banks to shelve planned rate cuts, keeping real interest rates elevated — a punishing environment for an asset that offers no yield.

President Trump’s rejection of an Iranian peace proposal has only deepened the standoff, though he noted that Tehran has asked Washington to lift the naval blockade while negotiations continue. For now, the diplomatic logjam shows no sign of breaking, and the pressure on gold remains intense.

A Tale of Two Markets

The disconnect between price action and underlying demand has rarely been starker. The World Gold Council reported a record $193 billion in global gold investment during the first quarter, with total demand edging up to roughly 1,230 tonnes. Central banks were the standout buyers, adding a net 244 tonnes — a 3% increase year-on-year — led by Poland, Uzbekistan, and a doubling of purchases by the People’s Bank of China.

Yet the market’s response has been brutally indifferent. North American gold ETFs hemorrhaged $13 billion in March alone, the largest monthly outflow on record, snapping a nine-month streak of inflows. On the other side of the globe, Chinese mainland ETFs have hoovered up $8.1 billion since January. That East-West divergence has left global gold ETF assets under management at $606 billion at the end of the first quarter — impressive, but overshadowed by the relentless selling in the West.

Jewelry demand tells a similar story: volumes fell sharply, but consumers still spent $47 billion, driven by the elevated price levels.

Technicals and the Fed Factor

Chart watchers see little relief ahead. Gold has sliced through its 50-day exponential moving average and was rejected at the upper boundary of a multi-month consolidation zone. The next meaningful support sits around $4,351, with a deeper floor near the 200-day moving average range of $4,075 to $4,174. Short-term momentum indicators point to further downside, with $4,440 emerging as the next line in the sand.

State Street remains relatively bullish, sticking to a year-end projection of $4,750 to $5,500 and arguing that the $4,000 area should hold as a floor. Banks like JPMorgan and Wells Fargo are even more optimistic, targeting levels above $6,000. But those forecasts hinge on a pivot that has yet to materialize.

All eyes are now on the afternoon’s US first-quarter GDP data and weekly jobless claims, which land alongside rate decisions from the European Central Bank and the Bank of England. A weaker-than-expected GDP print could ease pressure on the Federal Reserve and offer gold a reprieve. A robust reading, however, would likely reinforce the hawkish stance and keep the metal pinned near its lows.