Gold declined to $4,500 per ounce this week, marking a second consecutive weekly loss and extending the pullback from January's all-time high of $5,589. The $1,089 decline -- a 19.5% correction -- reflects the paradox confronting the precious metal: inflation is rising, which normally supports gold, but the rate hike expectations that inflation generates are rising even faster, making non-yielding gold less attractive relative to interest-bearing assets.
The 30-year Treasury yield above 5.1% is the primary headwind. With risk-free returns at their highest level since 2007, the opportunity cost of holding gold has increased dramatically. J.P. Morgan nonetheless maintains a year-end target of $5,055 per ounce, arguing that central bank purchases and eventual rate cuts will drive a second-half recovery. The divergence between current prices and forward forecasts reflects deep uncertainty about how the macro environment will evolve.
What happened
Gold's decline accelerated after the April PPI shock, which pushed Treasury yields sharply higher and forced a repricing of Fed rate expectations. The metal had been trading in a range between $4,600 and $4,800 through most of April before breaking lower on the PPI data. The selloff intensified as the dollar strengthened, adding currency headwinds for gold buyers outside the United States.
Central bank buying, which had been a powerful tailwind throughout 2024 and 2025, has moderated from its record pace. The World Gold Council reported Q1 2026 central bank purchases of 244 tonnes, still historically elevated but below the 290-tonne quarterly pace set in 2024. China's PBOC paused its