Gold’s $4,698 Floor: A Fed Handover, a Tehran Offer, and the Largest ETF Exodus on Record

Gold slides to $4,698 amid Iran Strait signals and Fed chair shift to hawkish Warsh, with record ETF outflows and divided analyst targets from $4,587 to $6,300.

The gold market enters one of its most consequential weeks of 2026 caught between a diplomatic overture from Tehran and a seismic leadership transition at the Federal Reserve. The metal tested a critical support zone on Monday, sliding to $4,698 per ounce in London trade before staging a tepid bounce.

The catalyst for the intraday volatility was twofold. Iran signaled a willingness to reopen the Strait of Hormuz in exchange for an end to US sanctions on its ports, a development that briefly pushed the dollar index DXY to 99.3 before it retreated to around 98.30 by the close of European trading. The diplomatic gesture weighed on gold’s haven premium, but the metal found a floor as traders weighed the implications of the Fed’s impending power shift.

Kevin Warsh’s confirmation as the next Fed chair now appears highly probable after the US Department of Justice dropped an investigation into Jerome Powell. Powell’s term ends on May 15, and the market is pricing in a swift transition. Warsh is viewed as an inflation hawk who favors a stricter inflation target — a stance that historically pressures gold through higher real yields and a more restrictive monetary policy.

A Divided Analyst Community

The divergence on Wall Street has rarely been starker. Goldman Sachs sees gold at $5,400 by year-end, citing central bank buying and hedging demand. JPMorgan is even more bullish, raising its target to $6,300 on expectations of sustained institutional and sovereign purchases. HSBC takes a more measured view, forecasting $5,000 by mid-2026 but cutting its annual average forecast to $4,587. Morgan Stanley, meanwhile, slashed its second-half target to $5,200 from $5,700, citing an unusual supply shock and rising real rates.

The People’s Bank of China continues to accumulate, extending its buying streak to 15 consecutive months since November 2024. This steady sovereign demand provides a floor even as western investors retreat.

The Great ETF Exodus

March saw a record $12 billion flow out of physically backed gold ETFs — the largest monthly outflow on record. Asian inflows, predominantly from China, partially offset the damage, but the scale of western liquidation is unprecedented. The exodus reflects a broader risk-off rotation as investors reposition ahead of the Fed transition and digest the implications of lower geopolitical risk premiums.

Inflation Pressures Persist

The final University of Michigan inflation expectations for April 2026 rose to a seven-month high of 4.7 percent, reinforcing gold’s appeal as an inflation hedge. Brent crude held near $107 per barrel despite the Hormuz signals, keeping energy-driven inflation pressures alive. The combination of sticky inflation and a hawkish incoming Fed chair creates a complex backdrop for the metal.

Technical Picture Tightens

On the four-hour chart, gold is compressing within a symmetrical triangle formation. The descending trendline from the April high near $4,900 meets an ascending line from the $4,300 low. The RSI sits below 50, indicating bearish momentum, and the price remains below the 200-day moving average.

Immediate support lies at $4,678 to $4,657. A break below that zone opens the door to $4,500. On the upside, the 200-day moving average at $4,750 represents the first resistance, followed by $4,800 and the April high around $4,890.

The Week Ahead

Wednesday brings the final regular Fed meeting under Powell’s leadership, with a rate pause widely expected. The focus will be on forward guidance and any signals about the pace of future easing. Thursday’s first-quarter US GDP data will be critical — a weak print would fuel recession fears and bolster gold, while strong growth would support the Fed’s hawkish stance.

The Strait of Hormuz remains the wildcard. A credible diplomatic resolution would lower oil prices, ease inflation expectations, and reduce pressure on the Fed. Until then, the combination of an uncertain Fed succession and elevated geopolitical risk will keep gold’s volatility elevated and its direction uncertain.