Gold extended its winning streak to five sessions on Wednesday, drawing support from a rare convergence of structural demand, geopolitical détente, and a shifting interest-rate outlook. The metal has recouped roughly 6.5% over the past week, yet remains nearly 22% below its January peak of $5,626.80 — a gap that hints at the scale of this year’s earlier selloff.
Sovereign buyers step in as retail exits
A fresh survey from the World Gold Council underscores the disconnect between private and official gold holders. While exchange-traded funds have shed over 25 tonnes in recent outflows, central banks are loading up. Among the reserve managers polled between February and May, 45% plan to increase their gold holdings in the next twelve months — the highest reading since the survey began in 2018. Fully 89% expect global central bank reserves to rise further, and 74% anticipate a continued decline in the dollar’s share of official reserves.
The buying has been relentless for years. State-sector purchases averaged 1,000 tonnes annually over the past four years, double the pace of the previous decade. Analysts attribute the trend to a growing distrust of the greenback as the world’s primary reserve currency and gold’s enduring role as a crisis hedge.
Iran agreement eases energy markets
A diplomatic breakthrough in Switzerland added fresh momentum. The United States and Iran are expected to sign a preliminary peace memorandum, with President Trump indicating the Strait of Hormuz could be fully reopened to shipping by Friday. The news immediately knocked Brent crude below $80 a barrel, easing energy-driven inflation fears and weighing on the dollar, which slid to a ten-day low.
Lower oil prices and a weaker dollar typically benefit gold, and Wednesday was no exception. The spot price rose 0.3% to $4,342 an ounce, though it later edged back toward $4,328 as some traders locked in profits.
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Warsh takes the helm at the Fed
All eyes are on the Federal Reserve’s first policy meeting under new chairman Kevin Warsh. No change in the fed funds rate is expected — it will remain in the 3.50%–3.75% range — but the dot plot and statement language will be scrutinized for clues on the future path. Markets have already adjusted expectations sharply: the CME FedWatch Tool now puts the probability of a December rate hike at just 58%, down from 70% a week ago.
A less aggressive Fed reduces the opportunity cost of holding non-yielding gold, a factor that has helped underpin the rally even as the initial risk premium from Middle East tensions fades.
Technical levels in focus
After bouncing from early-March lows near $4,000, gold has reclaimed several key thresholds. The next resistance sits at $4,381, just above Tuesday’s close of $4,361.50, followed by the more formidable $4,445 zone. On the downside, the $4,227 area offers strong support, providing a cushion should profit-taking intensify.
Beyond the headlines, physical demand from China and India continues to provide a backstop. Together with the structural buying by central banks, these flows have more than absorbed the ETF outflows, keeping the metal comfortably above the $4,300 handle.
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