The gold market is being pulled in multiple directions. While a tense geopolitical stalemate provides underlying support, shifting demand dynamics and a hawkish monetary policy outlook are capping its momentum. The precious metal traded near $4,750 an ounce on Wednesday, navigating a complex web of news.
A significant structural shift is emerging from Asia. The China gold spread—the premium for physical metal in Shanghai versus European spot prices—has collapsed from $12 to just $1 per ounce within a week. This compression signals that Western capital flows are currently driving prices more forcefully than Chinese physical demand. During the same period, gold gained $65 in Western trading compared to a $54 rise in China.
Nevertheless, China’s foundational role in the market remains intact. The People’s Bank of China added five tonnes to its reserves in March, its 17th consecutive monthly purchase and the largest since February 2025. Chinese gold-backed ETFs have also seen inflows for seven straight months.
Geopolitical tensions in the Middle East continue to underpin the safe-haven asset. The immediate trigger for a sharp price move, however, remains elusive. US President Donald Trump extended a ceasefire with Iran, but Tehran continues to block the Strait of Hormuz and has attacked cargo ships, with reports of three vessels disabled. Iranian negotiator Mohammed Bagher Ghalibaf labels the ongoing US naval patrols a breach of agreement, and direct peace talks are currently off the table according to the Tasnim news agency.
This stalemate has contributed to gold being down roughly ten percent since the conflict began, though it still shows a solid year-to-date gain of over nine percent.
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On the monetary policy front, comments from Federal Reserve leadership candidate Kevin Warsh introduced a note of caution. During his Senate hearing, Warsh pledged central bank independence and called for a new framework to tackle persistent inflation, though he provided few specifics. The market’s attention now turns to the next FOMC meeting on April 28-29. The CME Group pegs the probability of an unchanged interest rate at 99.5%, a factor that limits gold’s near-term upside potential.
Amid this backdrop, industry players are making strategic moves. Gold producers and financiers are leveraging the elevated price environment for acquisitions. Gold Candle finalized its acquisition of Fokus Mining Corp. on Wednesday in a deal valuing the Canadian explorer at approximately 65 million Canadian dollars. The transaction centers on the Galloway project in Quebec, which holds an estimated resource of nearly 1.5 million ounces of gold.
In a separate major deal, Wheaton Precious Metals is significantly expanding its portfolio with a $300 million agreement tied to a project with KGL Resources in Australia, plus a multi-million-dollar licensing fee for a venture in British Columbia. Another agreement is nearing completion in Ecuador, where CMOC Group is finalizing details for the Cangrejos gold project. Advance licensing fees are expected to reach $54 million, with $34 million payable immediately upon signing.
Looking ahead, Goldman Sachs maintains its year-end price target of $5,400 an ounce. Analysts cite persistent central bank purchases of around 60 tonnes per month and the expectation for two US interest rate cuts later in the year as key supports. Until then, the pace of Iran negotiations will likely set the short-term rhythm, with any new proposal from Tehran capable of abruptly repricing the market’s risk premium.
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