- Gold down nearly 8% since April
- Still up a third over 12 months
- Global uncertainty drove rally
Gold prices are facing renewed pressure, with expectations of higher interest rates and weaker summer demand weighing on the non-yielding asset after a record-breaking rally.
Yet experts believe prices should rebound over the longer term as countries increase gold holdings to reduce their dependence on the dollar and investors seek protection against the declining purchasing power of fiat currencies.
Gold has fallen nearly 8 percent since mid-April, trading at $4,467 per ounce on June 1. It is down $949, or 18 percent, from late January’s record high of $5,416.
“Gold will struggle to return to January’s peak price anytime soon, because it was a speculative blow-off – prices did get overexcited,” said Adrian Ash, head of research at online trading platform BullionVault.
The yellow metal is still up around a third over the past 12 months and has more than doubled in price from early 2024. Geopolitical uncertainty primarily drove the rally, Ash said.
“Gold tends to do well when the world is in trouble and its price jump coincided with Trump’s new world disorder,” he said. “Gold’s appeal is as a store of value.”
As such, gold’s renewed price decline since the start of the Iran war has surprised some investors, although that is because they misunderstand how gold functions as a safe-haven asset, Ash said.
“Gold’s price performance over the preceding 12 months enabled traders to take profits on winning positions to offset losses elsewhere,” he said. “You buy gold ahead of a crisis, not during a crisis, so that it’s there for you to tap should you need to.”
Central banks were buyers of 244 tonnes of gold in the first quarter of 2026, up 3 percent versus a year earlier “despite a visible uptick in selling activity”, a World Gold Council report states.
The council forecasts central banks will buy 700-900 tonnes of gold this year, estimating the UAE central bank acquired an additional tonne of the metal in the first quarter.
Turkey’s central bank has been among several institutions offloading gold this year to support its currency and help fund higher energy import costs following the start of the Iran war. An AI-driven equity rally also drew investors’ attention away from gold, said Ole Hansen, Saxo Bank’s head of commodity strategy.
Gold has twice found support at the 200-day moving average of about $4,400, he said.
“This suggests underlying demand remains intact despite the recent sell-off,” said Hansen. “However, many investors appear content to wait until there is greater clarity regarding the Middle East conflict and its impact on energy markets, inflation and monetary policy.”
Saxo Bank has a six- to 12-month gold price target of $5,500.
Historically, gold prices tend to be flat-to-lower during the summer and the same is likely this year, said Ash, due to there being few consumer buying catalysts such as religious holidays.
Further reading:
Further reading:
Since the outbreak of war, gold and oil prices have moved in opposite directions in two-thirds of trading days, Ash estimates.
This is because higher oil prices are stoking inflation, which in turn has changed interest-rate expectations. Prior to the war, markets forecast two further US Federal Reserve rate cuts this year. Now a rate increase seems more probable.
“Rising oil prices have strangled gold over the past three months,” Ash said.
Gold’s reputation as an inflation hedge remains valid, but the type of inflation matters, said Hansen.
“We are dealing with a supply-driven energy shock, where higher oil and gas prices are pushing inflation higher while simultaneously supporting bond yields and the dollar,” he said. “This combination tends to be less favourable for gold.”