Gold’s Hormuz Balancing Act: Central Bank Buying Meets a $4,723 Close

Gold ended the trading week at $4,723.70 an ounce, carving out a roughly 2% gain that nudged the metal back toward the April highs near $4,800. The three-day rally midweek was fueled by growing optimism over a potential US-Iran agreement and a softening dollar. Yet the yellow metal still sits about 13% below its 52-week peak of $5,450 from January, a gap that underscores the complex forces at play.

The culprit behind that shortfall is the interest rate channel. Rising energy prices tied to the Hormuz Strait blockade have pushed up inflation expectations, prompting markets to price in a more hawkish Federal Reserve. That dynamic is poison for a non-yielding asset like gold. Nearly 95% of market participants now expect the Fed to hold rates steady at 3.50% to 3.75% when it meets in June, according to CME Group data. Fed officials, including Austan Goolsbee, have warned that price pressures have accelerated since hostilities began.

Technically, gold is wrestling with its 50-day moving average near $4,775. A clean break above that level could open the door to fresh upside, while a failure risks retesting support around $4,000. The next major catalysts arrive on May 12 and 13, when the US releases April consumer and producer price data. Hotter-than-expected readings would put the $4,000 floor in play; softer numbers could propel the metal toward the $5,000 mark.

Central Banks Keep Buying

The structural picture remains constructive despite the near-term headwinds. Central banks added a net 244 tonnes of gold in the first quarter of 2026, exceeding both the prior quarter and the five-year average. Poland led the buyer list, with emerging-market institutions driving the bulk of demand. The value of those purchases hit a record $193 billion, reflecting both higher prices and sustained accumulation.

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Private investors are piling in as well, especially from Asia. Bar and coin demand surged 42% to 474 tonnes. Goldman Sachs points to this ongoing diversification into real assets as a key reason behind its year-end price target of $5,400 an ounce. Morgan Stanley sees gold at $5,200, while J.P. Morgan forecasts $5,000 by the fourth quarter, both backed by projected central bank demand of 585 tonnes per quarter.

The Geopolitical Wild Card

The fragile ceasefire between Washington and Tehran continues to dictate market direction. The Trump administration is awaiting Iran’s response on reopening the Strait of Hormuz, expected within the next two days via Pakistan. Meanwhile, US forces intercepted two Iranian oil tankers on May 8, underscoring the instability. The strait has been effectively closed since late February, removing roughly 14 million barrels per day from global markets, according to the IEA.

For gold, the transmission mechanism is straightforward: peace signals depress oil prices, which lowers inflation expectations and raises the odds of easier monetary policy. That’s a positive for bullion. A diplomatic breakthrough would strip the risk premium from energy commodities while leaving gold supported by its own structural drivers—central bank buying on one side, the Grasberg copper supply gap on the other. If talks collapse, the oil market faces another escalation, and volatility across all asset classes would spike.

Gold at a turning point? This analysis reveals what investors need to know now.

The next few days will determine which path the market takes. Tehran’s answer has the power to reshuffle the entire commodity deck—and gold, caught between rate fears and physical demand, is watching closely.

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