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Spot gold and silver tumbled sharply following Tuesday’s close, extending a downtrend that started after last Friday’s U.S. nonfarm payrolls release. Spot gold fell 1.64% to trade around $4,259.50 per ounce, while spot silver plummeted 4.17% to $65.335 per ounce. Both metals broke below key technical levels set a week earlier. Investors are now closely awaiting the upcoming May CPI report, and the persistent price decline has put Wall Street’s previous bullish forecasts for precious metals to the test.
The selloff is mainly driven by revived Federal Reserve rate hike expectations and a technical breakdown, which have overshadowed safe-haven demand linked to tensions around the Strait of Hormuz. Robust payroll figures erased market bets on Fed rate cuts and even raised odds of further tightening. Higher U.S. Treasury yields have lifted the opportunity cost of holding non-yielding gold. While geopolitical tensions remain elevated, they have failed to trigger sustained safe-haven buying. Combined with falling crude oil prices and a pullback in AI-related equities, bearish sentiment across the precious metals market intensified.
Wall Street analysts have diverged sharply in their assessments, with conflicting views emerging across short, medium and long-term horizons. Some major banks have slashed near-term price targets, while other firms remain firmly bullish on gold’s long-term prospects.
Citigroup has adopted a cautious stance for the near term. On Monday, the bank cut its three-month gold price forecast from $4,300 to $4,000 per ounce, arguing there are few immediate catalysts to drive a meaningful rally. It cited steady real yields, a stronger U.S. dollar and fading safe-haven premiums, alongside slower gold purchases by central banks and muted inflows into gold ETFs. According to the bank, gold will struggle to move higher unless a new major market shock emerges. This marks a notable reversal from January, when Citigroup raised its 0-3 month gold target to $5,000 per ounce and silver to $100 per ounce, citing geopolitical risks, physical supply shortages and uncertainties over Fed policies.
In contrast, Sprott Inc. maintains a long-term bullish stance. Paul Wong, the firm’s market strategist, said the latest price retreat is merely a consolidation phase rather than a full-blown trend reversal. He pointed out that global inflation has stayed above the Fed’s 2% target for five consecutive years and is still accelerating. Mounting sovereign debt and weakened effectiveness of traditional policy tools have eroded bonds’ value preservation function, bolstering gold’s appeal as a reliable store of wealth.
Global central banks keep buying gold on dips, with China among major buyers. Official institutions netted 244 tonnes of gold in the first quarter of 2026, above the average quarterly volume, forming a solid floor for gold prices.
The market is caught between near-term pressure from rate hike expectations and long-term worries over currency devaluation. The upcoming inflation data and Fed policy moves will dictate gold’s short-term trajectory, and a hotter-than-expected May CPI reading could trigger further downside. Nonetheless, the broader backdrop of elevated global debt, persistent inflation and constrained policy room remains unchanged, supporting gold’s safe-haven status.
The recent slump has prompted some Wall Street institutions to adjust their short-term outlooks and trim price targets, yet the core arguments of long-term gold bulls remain intact. The split among analysts reflects differing views on cyclical headwinds versus structural opportunities. The May CPI print will serve as a key near-term gauge, and whether Wall Street retains its bullish calls will ultimately hinge on the Fed’s policy path and evolving global macro conditions.
