Gold: Uptrend delayed on hawkish Fed repricing – OCBC

§ 01 Executive Snapshot

• What: Gold prices have faced pressure due to a hawkish Federal Reserve stance and inflation concerns driven by oil prices.
• Who: OCBC’s FX Strategist Sim Moh Siong, EM central banks, and geopolitical entities in the Middle East.
• Why it matters: This situation highlights the fragile state of safe-haven assets amid rising geopolitical tensions and monetary policy shifts.

§ 02 Key Developments

• Gold prices broke below the 200-day moving average, triggering accelerated selling amidst a hawkish Fed narrative and inflation fears.
• Prices stabilized after dipping below USD 4,300 as tensions between Iran and Israel showed signs of de-escalation.
• India raised import duties on gold and silver to 15% from 6%, effective May 13, 2026, aiming to curb imports.
• Türkiye’s central bank sold or loaned around 130 tonnes of gold in response to currency stabilization needs following the outbreak of war in the Middle East.
• OCBC has revised its end-2026 gold forecast down to USD 5,100/oz from USD 5,350/oz while acknowledging structural bullish drivers remain intact.

§ 03 Strategic Context

• The pressure on gold reflects a broader trend where safe-haven assets are challenged by monetary policy changes and geopolitical risks, particularly in emerging markets.
• The ongoing geopolitical fragmentation and currency debasement continue to create a complex landscape for gold as an investment, despite short-term pressures.

§ 04 Strategic Implications

• Immediate market implications include a potential decline in gold demand as safe-haven appeal diminishes due to higher yields and EM central bank actions.
• Long-term implications suggest that structural drivers could lead to a resurgence in gold prices if inflation moderates and geopolitical tensions persist.

§ 05 Risks & Constraints

• Regulatory risks from changes in import duties, such as India's increase, may further suppress demand for gold in key markets.
• Emerging market (EM) currency dynamics pose risks as central banks may need to mobilize gold reserves under pressure, affecting overall demand.

§ 06 Watchlist / Forward Signals

• Monitoring the impact of the Federal Reserve's policy changes on gold prices will be critical, especially in light of ongoing geopolitical developments.
• Future signals of success for gold prices will include stabilization in energy prices and a shift in central bank policies favoring gold accumulation over selling.