Gold’s $4,715 Rebound: A Stagflation Trap Tightens Around the Fed

The gold market has staged a dramatic about-face this week, vaulting more than $200 from a sharp test of the $4,500 floor to reclaim the $4,700 handle. By Friday morning, the LBMA fix stood at $4,715.49, a fresh weekly high, as traders juggled diplomatic glimmers from the Middle East with the looming threat of a disastrous US jobs report.

The Iran Factor and a Fragile Ceasefire

Thursday’s exchange of fire between the US and Iran marked the most severe test yet of the current truce. Both sides, however, have been quick to downplay the incident. The Trump administration struck an optimistic tone on a potential deal, while Tehran confirmed it is reviewing a US peace proposal. These cautious de-escalation signals have provided the bedrock for gold’s rebound, pushing the metal to a weekly peak of $4,746 before it settled back slightly.

The move also broke through a key resistance zone, opening the door for further upside—provided the macro backdrop doesn’t slam it shut.

A Central Bank Caught Between Two Fires

The Federal Reserve is now the market’s central obsession, and for good reason. The central bank left its benchmark rate unchanged at 3.5–3.75 percent in April, but the decision was anything but unanimous. Four members voted against the hold—the first such dissent since 1992—underscoring the deep divisions within the committee.

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The dilemma is textbook stagflation. Surging oil prices are fanning inflation, while the economy is visibly cooling. Latest US purchasing managers’ indices confirm the malaise: the manufacturing sector’s prices-paid sub-index rocketed to 84.6 in April, the largest single-month jump in the history of the series. At the same time, the employment component slumped to a one-year low. The Fed can’t raise rates without crushing an already fragile jobs market, and it can’t cut them without pouring fuel on inflation.

Market pricing reflects the paralysis. According to the CME Group, nearly 95 percent of traders expect the Fed to hold steady at its June meeting—the first to be chaired by Kevin Warsh, who takes over from Jerome Powell.

Jobs Data as a Catalyst

All attention now pivots to Friday’s US nonfarm payrolls report. Consensus estimates are bleak: just 62,000 new jobs are expected, a sharp drop from the prior month’s tally, which was nearly three times higher. A miss of that magnitude would pile immediate pressure on the Fed to signal earlier rate cuts, a scenario that could propel gold toward the next resistance line at $4,765.

Conversely, a surprise upside print would strengthen the dollar and likely drag the metal back toward its first support level at $4,630.

Physical Demand Provides a Floor

Beyond the macro noise, the physical market is sending its own powerful signal. The World Gold Council reported record first-quarter global demand of roughly 1,230 tonnes, driven by aggressive buying from institutional investors and central banks. Asian investors, in particular, have been snapping up bars and coins at an unprecedented pace.

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This voracious appetite is underpinning the bullish medium-term outlook from major houses. Goldman Sachs has lifted its year-end 2026 target to $5,400. Morgan Stanley sees the metal at $5,200 by the end of this year. A recent survey by the London Bullion Market Association painted an even more exuberant picture: 22 experts expect peaks above $5,000, five forecast a breakout above $6,000, and one outlier sees $7,000 per ounce.

Chart Levels and the Next Hurdle

Technically, the successful defense of the $4,500 support has brightened the picture considerably. The next major barrier sits at $4,800. A sustained break above that level would clear the path toward the psychologically critical $5,000 mark.

After the jobs data, the focus shifts immediately to the next macro catalyst: US consumer price inflation for April, due on May 12. A hotter-than-expected reading would revive the debate around rising real yields and could weigh on gold in the near term. For now, though, the metal is riding a wave of diplomatic hope, physical scarcity, and central bank paralysis—a combination that has historically proven potent.

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