Gold at $4,500: inflation data in focus | Week of 25 May
Gold steadies near $4,500: geopolitical uncertainty and demand headwinds persist
Gold staged a mid-week recovery after sliding to a low of $4,450 per ounce, clawing back above $4,500 as sentiment improved on progress in US-Iran ceasefire negotiations and stabilising bond yields — 10-year US Treasury yields retreated to 4.57% after touching 4.69% the prior Tuesday. President Trump posted on Truth Social that the final details of a deal are under discussion and would be announced shortly. However, Iran’s Fars news agency disputed that a memorandum of understanding had been reached, leaving the Strait of Hormuz reopening — and near-term gold price direction — contingent on further developments.
Structural headwinds persist. Monetary policy is materially tighter than markets had anticipated at the start of 2026, raising the opportunity cost of holding non-yielding assets. Adding to demand-side pressure, India — the world’s second-largest gold consumer — raised import duties sharply from 6% to 15% in May, the steepest increase on record. Indian gold demand in 2026 is expected to moderate, with jewellery and bar-and-coin demand estimated by the World Gold Council to decline by 50–60 tonnes, or approximately 10% YoY. Historically, higher duties tend to stimulate unofficial inflows, partially cushioning the impact on overall consumption.
From a technical standpoint, spot gold is at a crucial juncture, with prices lingering near the 200-day MA. A reclaim of this level is critical for the medium-term outlook to remain constructive. Failure to hold above it could trigger a further decline towards $4,400. Near-term upside is capped by recent local highs in the $4,700–$4,800 range.
