We warned about gold since late 2025. It is now down 29% from its January 2026 peak.

• On 24 June 2026, gold fell below USD 4,000 per ounce for the first time since November 2025, down approximately 29% from its all-time high of USD 5,594 reached in January 2026. Despite being widely seen as a safe haven, gold fell sharply when the US-Iran war broke out and has not recovered.
• The US Federal Reserve kept interest rates unchanged at its June 2026 meeting, but signalled that rate hikes (not cuts) are now more likely. Higher rates make gold less attractive because investors can earn returns from bonds and cash instead.
• Investor demand for gold through exchange-traded funds (ETFs) is weakening. Gold ETFs recorded net outflows in May and into early June. The same rate-cut thesis that drove gold's record-breaking rally in 2025 is now running in reverse, and ETF demand is no longer a source of support for prices.
• India, the world's second-largest gold consumer, raised import taxes on gold sharply in May 2026, causing monthly imports to fall 39%. While central banks overall resumed buying gold in April, key sellers like Russia continue to offload holdings, and Turkey's reserves remain under pressure.
• We recommend holding between 0% and 10% of your portfolio in gold, purely as a diversifier. Gold tends to move independently of shares and bonds, making a modest allocation beneficial for portfolio diversification. However, while gold is often viewed as a safe-haven asset, history shows that it has not consistently provided protection during every market crisis.

Earlier in the year, we argued that gold would prove to be a disappointing crisis hedge, and subsequent developments have reinforced that view. Gold fell 11.7% between the outbreak of US-Iran hostilities and the temporary lull in strikes on 8 April. It then rebounded alongside other major asset classes during the ceasefire period, before surrendering those gains. As of 24 June 2026, gold is trading at approximately USD 3,979 per ounce, down 29% from its 28 January 2026 all-time high of USD 5,594.

Three structural headwinds were already weighing on the outlook: a rate environment that had moved materially against gold since the war began, institutional selling from Turkey and Russia under pressure from the same energy shock gold was supposed to hedge, and a demand shock in India, where the government raised import duties to their highest level on record and asked citizens to stop buying.

The June 2026 FOMC meeting reaffirmed the headwind of rate hikes. None of these developments are marginal. The case against a large gold allocation has strengthened on multiple fronts since our last update: rates, ETF flows, and Indian demand have all moved against the gold outlook.

Related article: Three strikes against gold: rates, central banks and India

Related article: Do not buy the dip in gold

Related article: Is it time to buy the dip in gold?

The June FOMC: unanimous hold, divided and hawkish dot plot.

On 17 June 2026, the FOMC voted 12-0 to hold the federal funds rate at 3.5%–3.75% for the fourth consecutive meeting. The dot plot (18 of 19 submitted; Warsh declined) showed nine officials projecting at least one hike by year-end, with the median 2026 projection rising to 3.8% from 3.4% in March — a swing from a cut to a hike in one quarter. All forward-guidance language was removed; the prior statement’s commitment to “returning inflation to 2%” was replaced with a simple declaration: “The Committee will deliver price stability.”

Figure 1: Fed funds rate expectations — March vs June 2026 dot plots

	March 2026	June 2026
Median 2026 rate projection	3.4% (one cut)	3.8% (one hike)
Officials projecting ≥1 hike	0	9 of 18
2026 PCE inflation forecast	2.7%	3.6%
Easing bias language	Present	Removed
Source: Federal Reserve Summary of Economic Projections, March and June 2026.

In the immediate aftermath of the decision, the S&P 500 fell 1.21%, the 2-year Treasury yield rose 14 basis points, and gold fell alongside equities. The reaction illustrated the core problem: Fed hawkishness intensifies gold’s zero-yield penalty at the very moment when safe-haven demand might otherwise be expected.

Related article: June Fed recap: Warsh opens with a rate-hold and a new Fed playbook

Warsh’s Fed: forward guidance removed, balance sheet at risk.

The Federal Reserve's June meeting brought more than just a rate decision. Under its new chair Kevin Warsh, the Fed has signalled a fundamental shift in how it communicates with markets. Warsh declined to submit his own interest rate forecast, announced that the Fed would no longer provide forward rate guidance, and launched five internal reviews covering areas including the Fed's balance sheet and its inflation framework. This means that the uncertainty surrounding the rate path is likely to remain.

Inflation data adds to the pressure. US Personal Consumption Expenditures (PCE) inflation re-accelerated to 4.1% year-on-year in May, its highest level in three years, driven primarily by energy prices. The Fed has already raised its 2026 inflation forecast from 2.7% to 3.6%, signalling that rate cuts are off the table and rate hikes are possible. Some measures of underlying inflation, which strip out volatile items like food and energy, look less alarming — but even these remain above the Fed's 2% target.

What does this mean for gold? Potential rate hikes raise the opportunity cost of holding a zero-yield asset like gold relative to bonds, which are currently offering yields of around 4.5% on 10-year US Treasuries.

Gold ETFs: the investment channel is turning.

The rate environment does not just raise the opportunity cost of holding gold. It is also prompting investors to lock in gains after a record-breaking rally. Gold-backed ETFs recorded net outflows of 16 metric tonnes in May and continued to see outflows in the first half of June. These exits shed approximately USD 2 billion, pushing the total Assets Under Management (AUM) down 2% month-over-month to USD 604 billion. This suggests that ETF demand, which was a key pillar of the 2025 rally, is no longer providing the same level of support.

At the January peak of USD 5,594 per ounce, investors were pricing in multiple Fed cuts by year-end. The June dot plot has since replaced that expectation with a median projection of 3.8% and a majority of officials projecting at least one hike by the end of 2026.

Central banks: net buying resumed in April, but the composition tells a more complex story.

Central banks resumed net gold purchases in April, according to the World Gold Council’s June 2026 central bank statistics. Poland remained the largest buyer at 14 tonnes, bringing its year-to-date purchases to 45 tonnes. China’s 8-tonne net purchase in April was its highest since December 2024 and extended its buying streak to 18 consecutive months. The Czech Republic purchased 3 tonnes, its 38th consecutive monthly purchase.

Table 1: Central bank behaviour towards gold since the beginning of the US-Iran war

Central bank	Recent activity	Context
Turkey (CBRT)	Flat in April; was the world’s largest seller in 1Q26 (79t)	Short-term gold/USD swaps matured in April. Holdings fell from 830t to 693t since the war began. Longer-term swaps remain outstanding.
Russia (CBR)	Sold 6t in April; year-to-date sales of 22t	Selling streak continued for the fourth consecutive month. Holdings at a four-year low.
Poland (NBP)	Bought 14t in April; year-to-date 45t	Gold reserves at 595t, approximately 30% of total reserves. Multi-year plan toward 700t target.
China (PBoC)	Bought 8t in April; 18 consecutive months of purchases	Official gold reserves are now approximately 2,322t, around 9% of total reserves.
All central banks	Net purchases 19t in April; net purchases 244t in 1Q26	Headline figures positive but driven by Eastern European and Asian buyers; Russia selling persists.
Source: World Gold Council Central Bank Gold Statistics, June 2026; Gold Demand Trends Q1 2026.

The resumption of net buying in April is a genuine counterpoint, and the structural demand from Eastern European and Asian central banks appears durable. Poland, China and the Czech Republic reflect a multi-year strategic diversification away from USD-denominated reserves that is unlikely to reverse quickly.

However, the composition of activity still matters. Russia’s year-to-date sales of 22 tonnes represent continued liquidation under financial pressure, and Turkey’s gold holdings have fallen by more than 130 tonnes since the war began.

The WGC’s June 2026 Central Bank Gold Reserves Survey found a record 45% of reserve managers expect to raise gold holdings over the next 12 months, and 93% already hold gold, up from 81% a year ago. Survey intent and revealed behaviour under stress are different things: the sellers in this cycle did not plan to sell.

India: the world’s second-largest consumer tells its citizens not to buy.

On 13 May 2026, import duties on gold were raised from 6% to 15%, the largest single increase on record and a full reversal of the July 2024 duty cut, following Prime Minister Modi’s public call for Indian citizens to stop buying gold for one year.

The effect on demand has been immediate and measurable. Monthly gold imports fell 39% month-on-month to USD 3.4 billion in May, with estimated import volumes of 25 to 30 tonnes, sharply below April’s 46 tonnes and a two-year monthly average of 59 tonnes. As of 30 June 2026, domestic gold prices, reflecting both the duty hike and a 5.3% depreciation in the rupee, are up approximately 5.2% year-to-date, while international prices have fallen by 6.4%.

The WGC estimates India’s full-year gold demand will decline by approximately 10% year-on-year.  India taxed gold imports and urged citizens to stop buying gold. Under real financial pressure, gold is not what governments reach for. It is what they reach past.

Our position: unchanged, and reinforced by four developments.

We continue to recommend a small 0% to 10% allocation to gold for diversification. Gold’s long-run correlation with US equities is essentially zero, making a small allocation useful as a diversifier. A larger allocation premised on gold reliably protecting capital during geopolitical crises is not supported by the evidence presented in its performance this year.

Table 2: Correlation between gold and other asset classes

Asset	Longer-term (19 Jun 1971 to 19 Jun 2026)	Recent period (19 Jun 2021 to 19 Jun 2026)
US Equities	0.006	0.142
US Corporate Bonds	0.067	0.211
US Treasuries	0.070	0.211
World ex US Equities	0.143	0.292
Emerging Markets Equities	0.175	0.306
Commodities	0.390	0.348
Source: World Gold Council. Data as of 19 Jun 2026.

Our recommended product is the SPDR Gold MiniShares (NYSE: GLDM). Investors should assess suitability against their own investment objectives, financial situation and risk tolerance before investing.

Declaration

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report, including all investment theses, ratings, price targets and conclusions, has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.