The gold market is approaching a pivotal juncture. A combination of substantial ETF outflows and persistent US dollar strength has weighed heavily on the precious metal. The imminent release of US PCE inflation figures threatens to dictate its next significant move.
Interest Rate Expectations Create Headwinds
Paradoxically, gold has struggled to capitalize on recent geopolitical uncertainty. Despite escalating tensions in the US-Israel/Iran conflict and Brent crude oil trading near $109 per barrel, inflation fears have taken precedence. Market pricing now reflects expectations for zero Federal Reserve interest rate cuts in 2026—a stark reversal from the three cuts anticipated at the start of the year.
A key turning point occurred on March 18, when gold plunged 3.7% in a single session, breaking below its 50-day moving average. This sell-off was triggered by the Fed’s hawkish “dot plot,” which revised the central bank’s projected rate cuts for the year from two down to just one. A concurrently strengthening US dollar applied additional downward pressure.
Massive Outflows from the World’s Largest Gold ETF
Investor behavior underscores the current caution. The SPDR Gold Shares ETF (GLD), the world’s largest gold-backed fund, witnessed approximately $2.1 billion in withdrawals over one week. Its physical gold holdings dropped to 1,052 tonnes, marking a weekly decline of 14.57 tonnes. Analysts attribute this to profit-taking following gold’s record high of $5,598 at the end of January, alongside a rotation into riskier assets.
Should investors sell immediately? Or is it worth buying Gold?
This trend presents a notable contrast with silver. While gold experienced outflows, the largest silver ETF attracted $559 million in inflows during the same period, signaling a clear rotation within the precious metals sector.
Central Bank Purchases Show a Notable Slowdown
Demand-side dynamics offer further insight. Global central banks were net purchasers of just 5 tonnes of gold in January 2026, a significant drop from the 2025 monthly average of 27 tonnes. However, the buyer base is broadening. Malaysia emerged as a buyer for the first time since 2018, South Korea announced intentions to gain gold exposure through physically-backed ETFs, and China extended its buying streak to 15 consecutive months.
Despite the ongoing market correction, major financial institutions maintain their bullish long-term price targets for 2026, with forecasts ranging between $4,700 and $6,000. The immediate trajectory, however, hinges on the latest Core PCE data. With a month-over-month increase of 0.4% anticipated, this key inflation metric will determine whether gold’s recent weakness persists or if the metal can find firmer footing. The outcome will reveal if the Fed is likely to extend its pause on interest rates, thereby prolonging the pressure on gold.
Ad
Gold Stock: Buy or Sell?! New Gold Analysis from March 28 delivers the answer:
The latest Gold figures speak for themselves: Urgent action needed for Gold investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from March 28.
Gold: Buy or sell? Read more here...