Gold’s Physical Squeeze Intensifies: 127 Tonnes Head for Delivery as Macro Headwinds Drag Spot Below $4,100

Gold spot price tumbles 27% from peak amid hawkish Fed and strong dollar, but COMEX physical deliveries hit 2026 high and central banks plan record buying.

The yellow metal is nursing a four-week losing streak that has erased more than 10% of its value in 30 days, but beneath the surface of the spot market a strikingly different story is unfolding. On the COMEX, 40,841 delivery notices have been filed for the current contract month — the highest monthly tally of 2026 — representing 127 tonnes of gold that traders are demanding in physical form. The open interest has swelled 5.5% week-on-week to 363,192 contracts, and large speculators have been trimming their short positions. This physical grab is a conspicuous counterpoint to the macro-driven weakness that has pushed the spot price to around $4,103.70 per ounce, roughly 27% below January’s 52-week peak of $5,626.80.

The source of that weakness is clear. The Federal Reserve’s June 17 meeting, chaired by new Governor Kevin Warsh, delivered a hawkish surprise that reverberated through gold markets. The central bank revised its 2026 core inflation forecast upward from 2.7% to 3.6% and, for the first time, flagged the possibility of a rate increase rather than the cut markets had anticipated. Nine of the 18 Federal Open Market Committee members now see a hike as plausible this year, and the probability of a first move in September is pegged at roughly 62%. Higher yields make interest-bearing assets more appealing, and gold — which offers no coupon — suffers in comparison. A strengthening dollar amplifies the pain by making bullion more expensive for international buyers. On June 24, the metal slipped below $4,000 for the first time since November 2025, though it has since recovered slightly.

The pressure is not purely monetary. Geopolitical tensions in the Middle East have eased, sapping demand for safe-haven assets. Gold ETFs have recorded steady outflows as investors find less reason to hedge against crises. The combination of a hawkish Fed, a firmer dollar, and diminished geopolitical anxiety has created a perfect storm that has sent Goldman Sachs and Deutsche Bank cutting their year-end price targets. Goldman now sees gold at $4,900 by December 2026, down from a previous estimate of $5,400, citing the Fed’s refusal to loosen policy this year.

Yet the physical market tells a different tale. Central banks remain a powerful structural buyer. A World Gold Council survey of 76 institutions released in June found that 45% plan to boost their gold reserves over the next twelve months — a record proportion. In the first quarter of 2026 alone, central banks added 244 tonnes, nearly a quarter of annual mine output. Their aggregate holdings have hit a 50-year high of more than 36,000 tonnes. An even broader 89% of surveyed central banks expect global reserves to rise over the next year. This institutional demand softens the price slide but has not been enough to reverse it.

JPMorgan has held onto its more optimistic long-term outlook, and the technical picture offers a faint glimmer of hope. The relative strength index has fallen to 37, hovering just above oversold territory. However, the 200-day moving average has already been breached, and the $4,000 level now serves as the next critical support. A new Florida law taking effect July 1 designates gold and silver coins as legal tender and exempts them from certain taxes — a small but symbolic signal of how deeply physical bullion interest has penetrated US policy.

The coming week will test whether the macro headwinds or the physical floor proves stronger. A compressed US trading schedule — markets are closed Friday for Independence Day — means that Thursday’s non-farm payrolls report arrives a day early, alongside June PMI data, JOLTS job openings, the ISM manufacturing index, and the unemployment rate. Fed Governor Warsh is also scheduled to speak at the European Central Bank’s annual forum in Sintra, and traders will parse every syllable for clues on rate policy. A weak jobs print would likely allow gold to defend the $4,000 threshold and possibly rally toward $4,200. A robust report, however, would raise the pressure further — and test whether the physical market’s conviction can withstand another round of monetary tightening.