Gold Holds Above $4,700 as Hawkish Fed Caps Upside Despite Central Bank Buying

Gold traded near $4,726/oz in late May, under pressure from a hawkish Fed that has eliminated rate cut probability for 2026. The Fed held rates steady with four dissenting votes, signaling a growing policy divide amid the Iran conflict and persistent inflation above 2%.

Despite the rate headwind, structurally strong central bank buying provides support. The WGC estimates annual purchases of ~800 tonnes, driven by EM central banks diversifying from USD reserves. China's PBOC added 7 tonnes in Q1, more than double its Q4 2025 pace.

Morgan Stanley notes gold's safe-haven status has been 'blunted' by monetary policy, forecasting $5,200/oz in H2 2026. JP Morgan sees $5,055/oz by Q4 and $5,400/oz by end-2027. The Iran conflict embeds a risk premium though gold's response has been muted versus past crises.