How the Federal Reserve under the newly appointed Chair Kevin Warsh will impact gold prices remains the overarching question for macro markets.

The strange case of gold has fueled intense debate for some time, specifically since the outbreak of US-Iran hostilities on February 28.

It is worth noting that spot bullion had tested an all-time high of $5,594/oz on January 29, 2026, before heading to a sharp technical reversal.

Macro Anomalies: Why Bullion Faces Downside Pressure Amid US-Iran Geopolitics

As the quintessential safe-haven asset, gold has historically capitalized on geopolitical escalations due to its risk-off characteristics.This cycle, however, structural dynamics have shifted.

The initial geopolitical premium priced in at the onset of the conflict proved transient.While the yellow metal surged past $5,400/oz within days of the outbreak, prices subsequently plateaued and ultimately capitulated below the $4,200 threshold in March, despite the ongoing war.

Currently, gold spot prices are hovering between $4,270 and $4,330/oz, after recently testing a fresh low of $4,264.60, cementing their weakest technical consolidation phase since late March.

Gold Trapped by the Warsh Fed’s Terminal Rate Path

The uncertainty on the gold market remains acute and is unlikely to be resolved ahead of the upcoming FOMC meeting, marking Kevin Warsh’s debut as the new Chair of the Federal Reserve.

Market participants will dissect Warsh’s forward guidance to gauge the Board’s independence against explicit easing pressure from President Donald Trump.

A dovish capitulation via rate cuts appears highly improbable at this juncture, given sticky underlying inflation.

Instead, the focus is on whether the Fed will commit to aggressive inflation-fighting measures, even at the risk of political blowback from the Trump administration.

These diametrically opposed policy paths will dictate the trajectory of gold prices.Recent price action demonstrates that bullion is decoupling from geopolitical conflict, tracking instead sticky inflation data and shifting terminal rate expectations.

The underlying driver behind the recent gold sell-off is a surging US Dollar.

The greenback has rallied as markets price in a hawkish Fed due to the acceleration of inflation in the US.

This thesis is heavily reinforced by the latest pricing from the CME Group’s FedWatch Tool.

Traders are currently pricing in a 43% probability of a rate hike at the December meeting, a significant hawkish shift from the 14% probability recorded just one month ago.

The tight correlation between gold price action and the future policy path of the Warsh-led Federal Reserve is clearly evidenced by commentary from market experts surveyed by Money.it.

Chris Temple, Editor and Publisher of The National Investor newsletter and host of the Your Money Today podcast, underscored the pivotal role of the newly appointed Chair.

Temple emphasized that, in his view, Warsh is highly likely to indicate that “ he will not allow the Bond Market Vigilantes to run wild, and will near term favor arresting the renewed rise in inflation even at the expense of annoying Trump and causing some air to belatedly come out of market bubbles”. “If he talks and even acts tough/hawkish it will lead to further declines for gold ”.

Temple notes that “there is still a 1-in-3 chance of dropping to last summer’s breakout in the US$3,500/ounce area if new Fed Chair Warsh is even more ’hawkish’ near term than I expect ”.

As a result, Chris Temple currently maintains “a neutral to mildly bearish view near-term based on above / still uber-bullish longer term”.

He highlights the importance of real yields:

“Real yields have again turned negative as inflation’s rebound results in inflation exceeding the fed funds rate again. If the Warsh Fed shows tolerance of this, gold will at least have bottomed if not start a new up trend”.

The Critical Role of Real Yields: Gold Projected at $4,900–$5,300 by Year-End 2026

Market participants should also closely monitor the outlook of Brandon Aversano, founder of The Alloy Market—a digital precious metals trading platform—who confirmed he still remains “quite bullish on gold throughout the end of this year”, even though he “wouldn’t frame it as an ‘all-or-nothing’ moment right now, especially after the kind of run gold has had”.

Aversano admits that “it does make sense for some investors to take their profits now but for most people, I still think gold deserves a place as a hedge against currency weakness and more. If it were me - hang on”.

His base case scenario is that “gold will finish this year somewhere around $4900 to $5300 per ounce”.

This scenario “assumes a few things - mostly that the Fed stays cautious, real yields won’t move much higher, and the dollar will remain under pressure”.

He then explains:

“This will ensure that physical investment stays strong - and gold is the best option for physical investment. We’ve already seen major institutions maintain bullish expectations - like J.P. Morgan predicting gold will be around $5000 by the end of the year”.

Aversano confirms that one metric to be watched is “real yields”, noting that “gold doesn’t pay income, so when inflation-adjusted yields rise, the cost of holding gold will rise. When these real yields fall or confidence in paper assets weakens, gold will become much more attractive”.

This implies that “the biggest upside catalyst would be a Fed easing, a weaker dollar, and also renewed geopolitical stress. The big downside risk is a dollar that will be stronger-than-expected and a Fed that keeps policy tighter for longer than the markets expect”.

Gold Expert: “Disappointed if Bullion Closes 2026 Below the $5,000 Handle”

Simon Popple, founder of The Gold Program, has also issued his latest macro forecasts.

As a former investment banker, Popple remains structurally bullish over the long-term horizon.

However, he prefers not to pin down an exact price target at this juncture, “because there are so many variables that could impact it”, but he also says that he’d be “disappointed if it was less than $5,000 per ounce”.

Regarding the monetary policy transmission mechanism under Warsh, Popple told Money.it that “lower interest rates are likely to be bullish for the gold price. The question is WHEN will they do this?”

The answer is that “when it happens I see the gold price taking off”.

But why would the Fed cut instead of raising interest rates given the accelerating inflation?

“I’m bullish on gold. I refer to the main drivers of the price as M.I.D.I. which is an acronym for Market uncertainty - there’s plenty of that - Bullish for gold. Interest rates - lower is bullish for gold….I think that’s where we are heading. Debt - more debt = more uncertainty = bullish for gold. Inflation - although higher inflation normally leads to higher interest rates, because of the impact on the economy- particularly the eye watering levels of debt, I think they could be lowered. If interest rates come down despite increasing inflation I think that’ll be particularly bullish for the gold price”

Striking a more cautious tone regarding gold’s upside potential is Martin Robinson, Director and Investment Specialist at Amzonite.

He reminds that gold benefits “when investors begin to lose confidence in the stability of fiat currencies or the trajectory of real returns available from traditional investments”, adding that “this loss of confidence typically leads to increased investment in alternative store of value investments, such as gold”.

But Robinson also warns that “one risk to the gold story that has received relatively little discussion is the potential for economic resilience to exceed expectations while real yields remain high for an extended period”, observing that “if economies are able to grow steadily over time, if inflation is moderate and/or investors can earn competitive returns from other investments, then there is likely to be less pressure on investors to buy defensive assets including gold”.

Ultimately, the current gold anomaly demonstrates that its performance is decoupling from its traditional safe-haven status, shifting instead toward a regime driven by terminal rate expectations and US real yields.

The Federal Reserve under Kevin Warsh represents a crucial macroeconomic inflection point.

A hawkish stance aimed at anchoring inflation and neutralizing a bond vigilante sell-off poses near-term structural headwinds for bullion.

Conversely, a higher tolerance for inflation under Warsh could trigger a renewed cyclical bull run.

Beyond these near-term risks, institutional consensus remains structurally bullish over a longer time horizon, with gold widely projected to reclaim the $5,000 handle by the close of 2026.