Gold prices have fallen to their lowest level since March 2026, shedding more than $1,300 per ounce from their all-time highs. The precious metal has declined 4% in the past week and 8.5% over the last month, as geopolitical tensions in the Middle East and a strengthening US dollar divert investors toward oil and other commodities.
The current price of gold stands at $4,325.50 per ounce, down $39.85 or 1.01% on the day, briefly dipping below the psychologically important $4,300 mark. Over the past quarter, gold has lost 16.15% of its value, though it remains 28.15% higher than a year ago. The trigger for the latest sell-off is the intensification of hostilities between Israel and Iran-backed forces, following Israeli strikes on Lebanon and retaliatory long-range missile attacks on Israeli territory.
This escalation has dashed hopes for a ceasefire or peace deal that could have reopened the Strait of Hormuz. As long as about 20 million barrels per day from Persian Gulf producers remain off the market, oil prices will continue to draw capital away from gold. The metal is also suffering from a strong US dollar and expectations that the Federal Reserve will maintain a restrictive monetary policy.
Geopolitical turmoil and oil market dynamics
The conflict in the Middle East shows no signs of de-escalation. The war between the US, Israel and Iran, now in its third month, has kept crude oil futures highly profitable. Investors seeking safe-haven assets have shifted their focus from gold to energy commodities, which offer higher short-term returns. The situation in the Strait of Hormuz remains critical, and until supply from the region normalizes, gold will struggle to regain its safe-haven status.
– Gold is lagging behind other commodities, but its long-term fundamentals remain intact. The current weakness is driven by macroeconomic factors – said Jeffries analyst Fahad Tariq.
US economic data and the Fed’s new direction
The US economy continues to face high inflation. The annual inflation rate for April stood at 3.8%, the highest in three years. May figures are due next week. Meanwhile, a gallon of gasoline costs $4.16, raising living costs for Americans. Unemployment remains at 4.3%. These conditions set the stage for the Federal Reserve’s meeting scheduled for June 16-17, which will be chaired by the new Fed head, Kevin Warsh.
President Donald Trump has tasked Warsh with gradually lowering interest rates, but the Summary of Economic Projections will reveal if the Fed can afford to ease policy. If the central bank maintains a restrictive stance, non-yielding assets like gold will lose further appeal. The dollar’s strength, fueled by higher yields, also works against the yellow metal.
Long-term outlook and investor sentiment
Despite the current headwinds, some analysts believe gold’s underlying value remains solid. The metal has historically been a hedge against inflation and currency debasement, both of which are present in the current environment. However, until the geopolitical standoff eases and oil supply resumes, gold is likely to remain under pressure. Investors are now closely watching the Fed’s policy signals and the next moves in the Middle East.
The near-term picture for gold remains bearish. With no positive catalysts on the horizon, further declines below the $4,300 support level cannot be ruled out. Yet for patient, long-term holders, the current price may eventually offer an attractive entry point.
Źródło: WNP.PL, Fot. Brian A. Jackson / Shutterstock
