# Gold Price Outlook: Why Central Bank Support May Fade
Gold price may struggle in the near term because central bank reserve accumulation is no longer a top priority, according to Rob Haworth, Senior Investment Strategist at U.S. Bank Wealth Management. He said the war in Iran is forcing policymakers to focus on energy security, food, and economic stability instead of adding to gold reserves.
That matters because central bank demand has been a major driver of gold’s historic rally since late 2022. For Indian investors, the shift is important because weaker official-sector buying can limit upside in global bullion prices, even if domestic gold rates in INR stay supported by rupee moves and import costs.
Why is gold price struggling even as geopolitical tensions rise?
Gold price is struggling because investors are choosing liquidity over traditional safe-haven assets. According to Rob Haworth, escalating geopolitical tensions have not translated into stronger buying in gold, U.S. Treasuries, or even inflation-protected securities.
After hitting all-time highs in late January, gold has failed to regain momentum. Haworth described the earlier move as a speculative blow-off top, and he noted that prices have just suffered their sharpest weekly decline since the 1980s.
This is an unusual divergence for gold, which investors usually treat as a safe-haven asset during war and market stress. In the current environment, however, investors are prioritizing immediate access to cash, especially U.S. dollars, over holding non-yielding assets such as bullion.
For Indian investors, this means global XAUUSD can stay under pressure even when geopolitical headlines worsen. Domestic gold prices may still react differently if the Indian rupee weakens against the U.S. dollar, but the global signal from bullion markets remains cautious.
How have rates and yields changed gold's appeal?
Rising nominal and real interest rates are reducing gold’s appeal. Haworth said higher yields raise the opportunity cost of owning a non-yielding asset such as gold.
He also said even traditional defensive instruments are not working well. Government bond yields have climbed to multi-month highs, which shows investors are more worried about inflation and supply shocks than preserving capital in conventional safe havens.
Haworth added that Treasury Inflation-Protected Securities, or TIPS, are also under pressure. In his words, TIPS are duration-sensitive, and higher real yields are hurting them as well.
What is Rob Haworth saying about central bank gold buying?
Rob Haworth said central bank buying is unlikely to provide near-term support for gold price. He argued that many of the central banks that helped fuel gold’s rally are also net energy importers and now need capital for more urgent needs.
According to Haworth, oil prices are spiking while liquefied natural gas and fertilizer costs are also rising sharply. As a result, financial resources that could have gone into reserve diversification are being redirected toward essential imports and domestic stability.
Why are central banks prioritizing other assets over gold?
Central banks are prioritizing energy, food, and critical infrastructure because those assets are more urgent in the current crisis. Haworth said capital that might otherwise have been allocated to gold reserves is now being used to “sustain life.”
He said this is not mainly about gold being too expensive. Instead, it is about timing and priorities.
Haworth explained that central banks are not behaving like hedge funds that mark to market the value of their gold reserves. In his view, the issue is that society’s immediate needs have made other scarce assets more important than gold at this time.
Is central bank demand for gold ending permanently?
No, Haworth did not say central bank demand is ending permanently. He said central bank buying may eventually return, but only after geopolitical disruptions ease and energy markets normalize.
Until then, he expects official reserve accumulation to remain a lower priority. That could remove one of the most important support pillars behind gold’s rally from late 2022 onward.
For India, this is relevant because official-sector buying has been a key medium-term bullish factor for global precious metals. If that support weakens, Indian investors may need to watch rupee trends, inflation, and local festival demand more closely when assessing domestic gold price direction.
How are speculation and the $4,500 level affecting gold price?
Speculative positioning is becoming a headwind for gold price, and Haworth said $4,500 is an important psychological threshold. He warned that downside pressure could build if leveraged investors are forced to liquidate positions during broader portfolio stress.
He said many speculators tried to wait out volatility in February, hoping conditions would improve. But much of that speculative money is now underwater, and Haworth said the situation could get worse.
Why could liquidation pressure hurt bullion further?
Liquidation pressure could push gold lower because investors facing stress elsewhere may sell profitable or liquid assets to raise cash. Haworth said speculators are now faced with a difficult decision as losses mount.
That helps explain why gold has not responded positively to worsening geopolitical risk. Instead of buying bullion and other precious metals, investors and institutions are scrambling for liquidity.
Countries and companies are also seeking U.S. dollars to pay for energy imports and keep supply chains running. That liquidity preference is displacing demand that might otherwise have flowed into gold.
How does the Iran war and energy shock affect gold markets?
The war in Iran is affecting gold markets by lifting energy costs and tightening financial conditions rather than boosting safe-haven demand. Haworth said the longer the conflict lasts, the worse the pressure on the global economy becomes, even if it does not help gold.
He called this a key paradox for investors. Oil prices remain elevated, global growth faces pressure, and inflation risks are rising, yet gold is not receiving the normal safe-haven bid.
Why are oil, LNG, and fertilizer prices so important for gold?
Higher oil, liquefied natural gas, and fertilizer prices matter because they absorb capital and feed inflation. Haworth said these rising costs are forcing policymakers and businesses to spend on essential supply needs rather than reserve accumulation.
That shift is especially significant for countries that import energy. Instead of buying more bullion, they need U.S. dollars to secure fuel and maintain trade flows.
For Indian investors, this dynamic can cut two ways. Higher global energy prices can support domestic inflation and weaken the rupee, which may support local gold prices in INR, but weak international safe-haven demand can still cap upside in XAUUSD.
What should investors watch over the next four to six weeks?
Investors should watch whether energy disruptions persist into mid-April. Haworth said the Trump administration’s four- to six-week window is a key inflection point for markets.
If elevated oil prices continue into mid-April, businesses and consumers may start making more permanent adjustments. Haworth said that would likely include passing higher costs through to end markets.
What happens to gold if inflation and yields keep rising?
Gold faces a difficult backdrop if supply-driven inflation pushes bond yields higher. Haworth said higher inflation caused by supply constraints tends to lift yields, and that historically weighs on non-yielding assets such as gold.
At the same time, investors are finding that traditional defensive assets are not offering much protection. Treasuries are weak, TIPS are weak, and gold is not behaving like a classic crisis hedge.
Haworth also said he does not see evidence yet of a structural move away from the U.S. dollar or the Treasury market. Without that structural shift, he does not expect a quick revival in gold’s appeal.
Will gold price consolidate before the next major move?
Yes, Haworth expects gold to go through a period of consolidation as speculative excess is worked out and macroeconomic conditions stabilize. That suggests bullion may need time rather than just a lower price to rebuild a stronger base.
He said the current reset is more about a time period than a price level. In other words, central banks are not necessarily waiting for a cheaper entry point; they are waiting for the geopolitical and energy backdrop to become less urgent.
For Indian investors, the key watchpoint is whether global energy stress begins to ease while central bank demand returns. If oil remains high and the U.S. dollar stays firm, gold price may remain volatile despite its long-term safe-haven status. If those pressures start to fade, bullion could regain support more decisively.
