Gold Stumbles Below $4,300 as BMO Points to Underlying Demand

The precious metal’s recent performance remains notable given the macroeconomic headwinds triggered by the Federal Reserve’s latest tightening cycle. BMO analysts suggest the traditional inverse relationship between gold and bond yields is weakening, as speculative and official sector demand act as a counteracting force. This resilience is fueled by investors seeking hedges against currency debasement and mounting concerns over U.S. fiscal sustainability.

Global gold-backed ETFs recorded $4.2 billion in inflows over the past week, with North American funds accounting for $2.2 billion of that total. Beyond institutional investment, physical demand is showing signs of recovery. In India, the world’s second-largest consumer, wedding-related buying is narrowing market discounts. Simultaneously, China’s imports reached 124.5 tonnes in August, a 48% increase year-over-year, while domestic ETF holdings and futures volumes continue to climb. While BMO maintains a cautious near-term outlook due to the high-interest-rate environment, the bank projects gold will average $4,625 an ounce in the second half of 2026 before pushing toward $5,000 early next year.