Gold may face near-term pressure, but ING still expects bullion to climb to $5,000 per troy ounce by the end of the year, with central bank buying, recovering ETF inflows and potential Federal Reserve easing supporting the longer-term uptrend. For Indian investors, that means global macro signals, the U.S. dollar and crude oil remain critical for both international gold price moves and rupee-denominated rates.
Why has gold fallen even as the Iran conflict boosted geopolitical risk?
Gold has fallen because the current shock is being driven by oil and inflation, not by the kind of financial stress that usually boosts safe-haven demand. According to Ewa Manthey, commodities strategist at ING, gold has lost around 12% of its value since the Iran conflict began, but that decline does not signal a breakdown in gold’s safe-haven role.How does an oil price shock hurt gold?
Manthey said a supply-driven energy shock tends to push inflation higher, keep central banks on hold, and strengthen the U.S. dollar, all of which weigh on gold price performance. She wrote that gold’s safe-haven appeal works best during a financial crisis or growth shock, when real yields fall and the dollar weakens.High market liquidity also matters. Manthey noted that gold is liquid enough to become a source of cash when investors need to cover losses elsewhere, which can create selling pressure even during geopolitical stress.
Has this happened before?
Yes. Manthey said markets saw the same pattern in 2022 after Russia invaded Ukraine. Gold initially rallied, but then came under pressure as the inflationary effect of higher energy prices pushed bond yields and the U.S. dollar higher.She said the same dynamic has played out again in the Iran conflict, only faster. That comparison is important for XAUUSD traders and Indian bullion buyers because it shows that geopolitical tension does not automatically mean an immediate and sustained gold rally.
What are the biggest headwinds for gold right now?
The biggest headwinds are high real yields, a firm U.S. dollar, sticky inflation and a Federal Reserve that is not ready to cut rates quickly. Manthey said these macro forces are dominating short-term gold price action.What did the Federal Reserve signal?
Manthey noted that the Federal Reserve left rates unchanged in April and said the tone from Chair Jerome Powell was cautious. She added that inflation has re-accelerated since the war began, which has weakened the case for near-term easing.
ING’s U.S. economist still expects easing in the second half of the year, but Manthey warned that a prolonged energy shock could delay those cuts. As long as yields stay elevated and the dollar remains strong, gold faces resistance.
How did Trump’s rejection of Iran’s proposal affect gold?
Manthey said gold has also surrendered part of last week’s gains after President Trump rejected Iran’s latest proposal. That move kept the ceasefire timeline uncertain and inflation risks elevated.She wrote that this reinforces the higher-for-longer interest-rate narrative that has weighed on bullion throughout the conflict. In her view, a durable resolution to the conflict remains the key catalyst for a sustained gold recovery.
What did the U.S. jobs data show?
Manthey pointed to Friday’s payrolls data, which showed employers added jobs for a second consecutive month in April while the unemployment rate held steady at 4.3%. That gives the Federal Reserve little reason to rush into rate cuts.For gold, that matters because delayed cuts tend to keep Treasury yields and the U.S. dollar elevated. Both are negative for non-yielding assets such as gold.
Why does this matter for Indian investors?
Indian investors should watch this U.S. macro backdrop closely because it affects both international bullion prices and the USD/INR exchange rate. A stronger dollar can limit gains in XAUUSD, but if the rupee weakens at the same time, domestic gold prices in India can remain supported.Higher oil prices also matter directly to India because they can worsen imported inflation and pressure the rupee. That creates a more complex setup in which global gold may struggle short term while Indian gold prices stay firm in rupee terms.
What inflation and Fed risks should gold investors watch this week?
Investors should watch incoming inflation data and leadership uncertainty around the Federal Reserve because both could shape rate-cut expectations. Manthey said this week’s inflation data could reinforce the central bank’s cautious stance.
She also noted that Powell’s tenure ends this week, adding another layer of uncertainty around Federal Reserve independence. For gold markets, any shift in Fed credibility or policy expectations could quickly affect real yields, the dollar and safe-haven positioning.
How are central banks supporting the gold market?
Central bank buying remains a major support for gold, even though official sector demand has slowed from earlier peaks. Manthey said this reserve diversification trend is still positive for gold over the medium term.What did China’s central bank buy?
According to Manthey, China’s central bank returned to buying in April, adding 8.1 tonnes of gold. That was the largest monthly purchase since December 2024.The move extended China’s buying streak to 15 consecutive months and lifted total holdings to around 2,305 tonnes. Continued buying from a major central bank is a strong signal for long-term bullion demand.
What does World Gold Council data show?
Manthey cited World Gold Council data showing that central banks turned net sellers in March, with net sales of around 30 tonnes. Even so, purchases in the first quarter totalled 27 tonnes.That means official demand remained positive overall despite monthly volatility. For the gold market, that helps offset macro headwinds from rates and the dollar.
Which countries bought and sold gold?
Turkey led the selling, cutting holdings by 60 tonnes in March as part of efforts to support FX liquidity. That took Turkey’s first-quarter net sales to 79 tonnes.Buying remained concentrated. Poland added 11 tonnes in March and 31 tonnes year-to-date.
Manthey added that central bank demand rose 17% quarter-on-quarter in Q1, with Poland and Uzbekistan leading purchases. The National Bank of Poland was the largest buyer, increasing reserves by 31 tonnes over the quarter to 582 tonnes.
Despite comments from Governor Adam Glapiński about the possibility of selling some gold, Manthey said the Polish central bank still appears focused on reaching its 700 tonne target.
What about Turkey and Russia selling?
Manthey said that despite large gold sales by Turkey and Russia, the overall data still support a slower but positive trend in official sector demand. She said reserve diversification remains supportive for gold over the medium term.For Indian investors, that matters because central bank accumulation often provides a structural floor for bullion, especially during periods when speculative flows weaken.
Are gold ETF flows and futures positioning improving?
Yes, early signs suggest investor positioning is starting to improve after weakness during the Iran conflict. Manthey said ETF outflows had weighed on prices since the conflict began, unwinding much of this year’s earlier inflows.How much money moved into gold ETFs?
Manthey said global gold ETFs recorded roughly $6.6 billion of inflows in April, reversing March outflows, according to World Gold Council data. Europe led the move.She said European demand reflected concerns that the region would be more exposed to a Strait of Hormuz closure. Contributions from Asia and the U.S. were around a third of Europe’s over the month.
Is there room for more ETF buying?
Yes. Manthey noted that ETF holdings remain well below the November 2020 peak, which suggests there is room for a substantial rebuild in holdings.
She added that ETF flows closely track Federal Reserve expectations. In ING’s view, Fed easing in the second half should act as a catalyst for renewed inflows.
What does COMEX positioning show?
Manthey said COMEX managed money net longs still point to a constructive investor backdrop. At the same time, she noted that positioning has not yet reached crowded territory.That matters because it suggests speculative participation in gold is supportive, but not so stretched that it signals an immediate positioning risk.
Will gold reach $5,000 per ounce by the end of the year?
ING believes gold can reach $5,000 per ounce by year-end, but that move depends on easing energy prices, cooling inflation and Federal Reserve rate cuts in the second half. Manthey said the bank remains constructive on gold despite near-term uncertainty from stalled peace talks.What conditions does ING need to see?
Manthey said the path higher depends on three main factors: energy prices easing, inflation cooling, and the Federal Reserve cutting rates in the second half of the year. She added that central bank buying and recovering ETF flows provide additional support.In other words, ING’s bullish gold price forecast does not rely only on geopolitics. It depends on a broader macro shift that would reduce pressure from real yields and the dollar.
What is the main downside risk to gold?
Manthey said the main downside risk is a breakdown in peace talks that keeps energy prices elevated and the Federal Reserve on hold into year-end. If that happens, gold could remain under pressure even if long-term demand stays intact.Is gold’s safe-haven role still intact?
Yes. Manthey explicitly said gold’s safe-haven role is not in question.However, she stressed that recent months show how short-term gold price action can be dominated by macro forces, especially real yields, the U.S. dollar, and expectations for Federal Reserve policy. Once those headwinds begin to ease, she said gold’s underlying support should reassert itself.
For Indian investors, the key watchpoints are clear: U.S. inflation data, Federal Reserve signals, oil prices, the Iran ceasefire path, ETF flows and central bank buying. If those variables turn supportive together, the global gold price forecast of $5,000 per ounce could start feeding into even stronger domestic bullion prices in rupee terms.
