Gold outlook: Can oil shocks, central bank buying revive bullion prices in May?
Gold prices ended April 2026 nearly flat at US$4,611/oz as easing market volatility and improving investor sentiment reduced safe-haven demand. However, strong ETF inflows, rising oil prices, geopolitical tensions, and continued central bank buying are reviving debate over whether gold could regain momentum in May.
- May 8, 2026,
- Updated May 8, 2026 8:10 AM IST
Gold prices may be entering a critical phase in May as investors weigh improving market sentiment against rising geopolitical and energy-related risks that could revive demand for safe-haven assets.
According to the World Gold Council’s latest Gold Market Commentary, gold prices ended April 2026 nearly flat at US$4,611 per ounce, as easing market volatility and stronger investor risk appetite reduced immediate safe-haven buying.
Despite the muted monthly performance, the report suggests that underlying structural factors supporting gold remain intact, raising questions about whether bullion could regain momentum in May.
MUST READ: Is gold becoming investors’ favourite safe-haven bet again in 2026?
ETF inflows provide support
One of the key support factors during April was strong inflows into global gold exchange-traded funds (ETFs). Surprisingly, Europe emerged as the largest contributor to ETF inflows, reflecting investor concerns that the ongoing Strait of Hormuz disruption could significantly impact Europe through higher energy prices and supply-chain risks.
The World Gold Council said Asia and the United States also recorded ETF inflows, though at lower levels than Europe. These inflows helped offset pressure from improving equity markets and declining volatility.
Gold also received support from a moderately weaker US dollar and dip-buying following the sharp correction witnessed in March.
Markets treating crisis as “transitory”
The report noted that financial markets currently appear to be treating the Middle East crisis and Strait of Hormuz disruption as “transitory,” limiting panic-driven allocations into gold.
MUST READ: Are NSE Electronic Gold Receipts better than physical gold or Gold ETFs?
US equity markets have rebounded strongly, volatility indicators have eased, and investors are increasingly pricing in a “higher-for-longer” US interest-rate environment. These factors are typically considered negative for gold because higher rates increase the opportunity cost of holding non-yielding assets like bullion.
The report also highlighted that gold remains technically vulnerable in the near term. While the March sell-off held above key support near US$4,075 per ounce, analysts said the recovery has so far struggled to break above important resistance levels.
Oil risks and stagflation concerns
Even as markets remain calm for now, the World Gold Council warned that risks could quickly return if the geopolitical shock proves more prolonged than investors currently expect.
Brent and WTI crude futures continue to trade at premiums of roughly 22–25% above pre-crisis levels, signaling that oil markets still expect elevated energy prices for an extended period.
The report cited estimates from J.P. Morgan suggesting that global oil inventories could approach operationally critical levels by September if the crisis remains unresolved. Such a scenario could trigger disorderly oil pricing, inflationary pressures, and broader economic stress — conditions that historically tend to support gold prices.
MUST READ: Banks face prolonged gold, silver import delays; domestic bullion prices rise: Report
The World Gold Council also pointed to growing stagflation risks globally, even though markets have recently reduced expectations of an immediate inflation shock.
Central bank buying
Beyond short-term market movements, central bank gold purchases continue to provide structural support for bullion prices.
The report noted that concerns around elevated global debt levels, persistent fiscal deficits, inflation uncertainty, and gradual diversification away from the US dollar remain supportive for gold over the longer term.
Importantly, gold futures positioning remains relatively neutral, indicating that investors still have room to rebuild positions if volatility rises again.
For May, analysts believe gold’s direction may largely depend on whether geopolitical tensions escalate further, oil prices continue rising, or markets begin reassessing inflation and growth risks more aggressively. Until then, gold may remain caught between short-term caution and long-term structural optimism.
MUST READ: BT Explainer: NSE’s Electronic Gold Receipts (EGR) launched - what they mean for you
Gold prices may be entering a critical phase in May as investors weigh improving market sentiment against rising geopolitical and energy-related risks that could revive demand for safe-haven assets.
According to the World Gold Council’s latest Gold Market Commentary, gold prices ended April 2026 nearly flat at US$4,611 per ounce, as easing market volatility and stronger investor risk appetite reduced immediate safe-haven buying.
Despite the muted monthly performance, the report suggests that underlying structural factors supporting gold remain intact, raising questions about whether bullion could regain momentum in May.
MUST READ: Is gold becoming investors’ favourite safe-haven bet again in 2026?
ETF inflows provide support
One of the key support factors during April was strong inflows into global gold exchange-traded funds (ETFs). Surprisingly, Europe emerged as the largest contributor to ETF inflows, reflecting investor concerns that the ongoing Strait of Hormuz disruption could significantly impact Europe through higher energy prices and supply-chain risks.
The World Gold Council said Asia and the United States also recorded ETF inflows, though at lower levels than Europe. These inflows helped offset pressure from improving equity markets and declining volatility.
Gold also received support from a moderately weaker US dollar and dip-buying following the sharp correction witnessed in March.
Markets treating crisis as “transitory”
The report noted that financial markets currently appear to be treating the Middle East crisis and Strait of Hormuz disruption as “transitory,” limiting panic-driven allocations into gold.
MUST READ: Are NSE Electronic Gold Receipts better than physical gold or Gold ETFs?
US equity markets have rebounded strongly, volatility indicators have eased, and investors are increasingly pricing in a “higher-for-longer” US interest-rate environment. These factors are typically considered negative for gold because higher rates increase the opportunity cost of holding non-yielding assets like bullion.
The report also highlighted that gold remains technically vulnerable in the near term. While the March sell-off held above key support near US$4,075 per ounce, analysts said the recovery has so far struggled to break above important resistance levels.
Oil risks and stagflation concerns
Even as markets remain calm for now, the World Gold Council warned that risks could quickly return if the geopolitical shock proves more prolonged than investors currently expect.
Brent and WTI crude futures continue to trade at premiums of roughly 22–25% above pre-crisis levels, signaling that oil markets still expect elevated energy prices for an extended period.
The report cited estimates from J.P. Morgan suggesting that global oil inventories could approach operationally critical levels by September if the crisis remains unresolved. Such a scenario could trigger disorderly oil pricing, inflationary pressures, and broader economic stress — conditions that historically tend to support gold prices.
MUST READ: Banks face prolonged gold, silver import delays; domestic bullion prices rise: Report
The World Gold Council also pointed to growing stagflation risks globally, even though markets have recently reduced expectations of an immediate inflation shock.
Central bank buying
Beyond short-term market movements, central bank gold purchases continue to provide structural support for bullion prices.
The report noted that concerns around elevated global debt levels, persistent fiscal deficits, inflation uncertainty, and gradual diversification away from the US dollar remain supportive for gold over the longer term.
Importantly, gold futures positioning remains relatively neutral, indicating that investors still have room to rebuild positions if volatility rises again.
For May, analysts believe gold’s direction may largely depend on whether geopolitical tensions escalate further, oil prices continue rising, or markets begin reassessing inflation and growth risks more aggressively. Until then, gold may remain caught between short-term caution and long-term structural optimism.
MUST READ: BT Explainer: NSE’s Electronic Gold Receipts (EGR) launched - what they mean for you