Gold's Paradox: Prices Slide While Wall Street Targets Soar

Gold trades near $4,599 as Fed decision looms, but analysts forecast $4,916 for 2026. Hawkish tone could pressure gold; bullish bets from UBS, Goldman, J.P. Morgan signal long-term rally.

The yellow metal is caught in a curious tug-of-war. On Tuesday, gold traded at roughly $4,599 an ounce, its weakest level since late March, after shedding about 2.4% over two consecutive sessions. Yet a Reuters poll of 31 analysts has pushed the 2026 consensus forecast to $4,916 — the highest since the survey began in 2014 — with major banks projecting even loftier targets.

The Fed's Farewell Complicates the Picture

Today marks a pivotal moment for Jerome Powell. The Federal Open Market Committee convenes for its third meeting of the year, and this will be Powell's last as chair. Kevin Warsh is slated to take the helm on May 15, with the Senate Banking Committee voting on his nomination later today.

Markets assign a 99.5% probability that the Fed holds rates steady at 3.50% to 3.75%. The real drama lies in Powell's tone. A hawkish stance — signaling no imminent rate cuts — could push gold toward $4,600. A more dovish read on inflation would open the door to a recovery toward $4,865. The added twist: investors must interpret today's statement not just as monetary policy guidance, but as a potential final signal before a leadership transition.

Oil, Iran, and the Dollar Squeeze

The current selloff defies conventional logic. Brent crude sits above $100 a barrel, the Strait of Hormuz remains blocked, and geopolitical tensions are elevated — conditions that typically boost gold. But the mechanism has flipped. Surging energy prices keep inflation expectations elevated, forcing the Fed to maintain higher real interest rates. That dynamic is crushing gold's appeal as a non-yielding asset.

The Iran factor adds another layer. Tehran reportedly floated a proposal via Pakistani intermediaries to reopen the Strait of Hormuz if Washington lifts its naval blockade. President Trump rejected the offer, dashing hopes for a quick resolution to energy supply disruptions.

A strengthening dollar is compounding the pressure. Investors are piling into US Treasuries as a safe haven ahead of the Fed decision, pushing yields near 4.4% and the dollar higher — a dual headwind for gold.

Wall Street's Bullish Bet

Despite gold sitting roughly 11% below its January peak of $5,595, the analyst community is raising its sights. UBS targets $5,900 by year-end 2026. Goldman Sachs sees $5,400. J.P. Morgan and Wells Fargo are even more aggressive at $6,300. Bank of America weighs in at $6,000.

The World Gold Council projects official sector purchases of 700 to 850 tonnes for 2026. London vaults held approximately 9,339 tonnes at the end of March, worth nearly $1.4 trillion at current prices.

StoneX analyst Rhona O'Connell notes that any easing in Middle East tensions would actually provide structural tailwinds for gold. Julius Baer's Carsten Menke adds that investment demand will revive once expectations of looser monetary policy return.

Technical Crossroads

Gold is testing a critical zone between $4,579 and $4,607. Holding this range opens a path toward $4,734. A break below brings the next support at roughly $4,440 into play, with the 200-day exponential moving average near $4,200 serving as the ultimate bull-bear line since October 2025.

The relative strength index sits at about 50 — not oversold, meaning there's technical room for further downside before a bounce becomes probable. The next major resistance stands at approximately $4,820.

For context, gold remains roughly 39% higher year-on-year. The disconnect between current price action and analyst forecasts underscores just how much hinges on Powell's words this evening. His final press conference as Fed chair will likely determine whether this correction deepens or reverses in the weeks ahead.