Gold’s Three-Way Tug-of-War: Central Bank Hoarding, Iran Optimism, and a Hawkish Fed Chair

Gold edges up 0.05% as record central bank purchases, potential US-Iran detente, and a new Fed hawk create conflicting market forces.

The gold market ended a subdued trading session on Monday with a modest gain, but the forces shaping its trajectory have rarely been more conflicted. Bullion changed hands at roughly $4,523 per ounce, barely 0.05 percent above Friday’s close, yet the quiet surface masks a furious debate among three structural drivers: a record-breaking wave of central bank purchases, the prospect of a US-Iran detente that could crush oil prices, and a newly installed hawk at the helm of the Federal Reserve.

None of these forces is moving in isolation, and their interplay is producing a market that feels less like a directional trend and more like a tug-of-war.

Central banks build a floor

The most reliable pillar of demand came into sharper focus over the weekend with fresh data from the World Gold Council. Central banks collectively bought 244 net tonnes of gold in the first quarter of 2026, a 17 percent increase from the previous quarter and a pace that, if sustained, would comfortably exceed the 700-900 tonne full-year band the WGC now forecasts.

Poland, Uzbekistan and China led the charge, but the breadth of buying is expanding. Guatemala, Indonesia and Malaysia have joined the roster of recent purchasers, while the People’s Bank of China extended its buying streak to 17 consecutive months. This structural bid has become the bedrock beneath a market that otherwise looks technically fragile.

On the charts, gold is trading below its 50- and 100-day exponential moving averages, a bearish signal for the short- and medium-term. Only the 200-day EMA — currently providing support — keeps the long-term uptrend intact. That makes the central bank bid all the more critical as a cushion against deeper corrections.

The Iran wild card — disinflation in disguise?

Monday’s price action was largely dictated by geopolitical headlines. President Trump stated over the weekend that a peace agreement with Iran was “largely negotiated,” triggering a sharp sell-off in oil markets that in turn provided a tailwind for precious metals. Iran’s Fars news agency swiftly denied the claim, pointing to unresolved differences over the nuclear program and control of the Strait of Hormuz.

Yet the market is already pricing in a partial deal. Brent crude fell 3.22 percent to $100.21 per barrel, while WTI slid to $90.95 — roughly 5.8 percent lower. A Hormuz reopening would slash oil prices, ease inflationary pressures, and give the Federal Reserve more room to cut rates. For gold, that would be a powerful catalyst: compressed real yields have historically been the primary engine of major bull rallies.

But the Iran story is anything but settled. The core obstacle remains 440 kilograms of 60%-enriched uranium held by Tehran — described by the IAEA as “a short technical step away from weapons-grade.” The United States insists on its removal, and while Russia has reportedly offered to take custody, Tehran has pushed back against linking a release of frozen foreign assets to any nuclear handover. Until that knot is untied, the geopolitical risk premium will not fully dissipate.

Warsh’s hawkish shadow complicates the calculus

Enter Kevin Warsh. Sworn in as Federal Reserve chair on Friday, the new chief is widely regarded as a monetary hawk. The April FOMC minutes reinforced that perception: language on policy flexibility was dropped, and a majority of members signalled that rate increases would likely become appropriate if inflation remains persistently above two percent.

That stance directly counteracts any disinflationary benefit from lower oil prices. Markets are currently pricing a roughly 55 percent probability of at least one 25-basis-point rate hike by October, a headwind that has kept gold’s 30-day return in negative territory at minus 4.2 percent. Warsh’s ability to follow through on his hawkish rhetoric will be tested this week by US first-quarter GDP data and weekly jobless claims — numbers that could either validate or undermine the tightening bias.

Silver steals the spotlight

While gold treaded water, silver made a more emphatic move. The white metal jumped over 3 percent on the day to $77.80 per ounce, pushing the gold-silver ratio down to 58.9 — a level that historically signals simultaneous industrial and investment demand for silver. Over half of silver’s consumption now comes from industrial uses, with solar panel fabrication alone devouring 230 million ounces annually. The market is on track for its fifth consecutive annual deficit, with cumulative shortfalls since 2021 estimated at 820 million ounces.

A Hormuz reopening would ease global supply chains and further support silver’s industrial bid, giving it an edge over gold in the near term — provided the Fed does not slam the brakes on growth first.

Bank forecasts still lean bullish — with caveats

Despite the near-term crosscurrents, major investment houses remain constructive on gold’s medium-term prospects. J.P. Morgan has flagged a possible year-end range of $6,000 to $6,300 per ounce, while Goldman Sachs sees $5,400 as achievable. The common thread is central bank buying, estimated at roughly 800 tonnes annually, and the potential for a rate-cutting cycle if disinflation gains traction.

But these forecasts assume a resolution to the very factors now pulling gold in opposite directions: a Fed that pivots dovish, an Iran deal that defangs the oil threat, and a continuation of the structural bid from sovereign buyers. For now, all three remain in play — and the market is left to weigh them against one another, one headline at a time.