(Kitco News) – Gold became a major investment theme at the start of the year as central bank demand helped drive prices to record highs above $5,600 an ounce; however, sentiment has turned significantly more cautious in the second half of 2026 as the conflict in the Middle East remains far from over.
In an interview with Kitco News, Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, said that if gold stands a chance of rallying back to $5,000 an ounce, the war in Iran needs to end and global energy markets need to normalize, allowing central banks to refocus on diversifying their official reserves.
Haworth said that although gold’s longer-term investment appeal remains intact, the precious metal continues to face significant headwinds as central banks prioritize economic stability and energy security over accumulating more gold.
“I think the pressure probably stays here in the gold market as long as the conflict is in place,” he said.
Haworth explained that the gold market has returned to trading on more traditional fundamentals, including real interest rates and the U.S. dollar. At the same time, central banks that previously helped drive the precious metal’s historic rally have been forced to redirect their attention toward securing critical energy supplies.
His latest comments reinforce the cautious outlook he outlined in late March, when he warned that official-sector gold accumulation was no longer a priority for many central banks.
He explained that the conflict in Iran created a significant shift in global capital flows, as countries struggling with higher energy and food costs redirected resources away from reserve diversification.
At the same time, he also warned that gold’s traditional safe-haven appeal was being undermined by rising bond yields, a stronger U.S. dollar and growing demand for liquidity.
Eight months into the Middle East conflict, Haworth said that the underlying challenges have not materially changed, even as gold prices have fallen significantly from their January record highs.
He explained that central banks remain distracted by the ongoing conflict and the need to secure energy supplies, leaving the gold market without one of the most important sources of demand that supported its previous rally.
Looking ahead, Haworth said a sustained recovery in gold prices will require greater clarity surrounding the conflict, global trade and the future direction of official-sector gold purchases.
“I think that’s where we have to get back to, which means we need to get the war behind us, get some clarity on global trade, and then see how countries really start to rebuild their central bank holdings,” he said.
He added that investors will need to see renewed official-sector accumulation before gold can generate another significant bullish move.
Haworth said that although central banks have not necessarily abandoned their long-term interest in gold, their immediate priorities have changed. He noted that many countries are focused on protecting their economies from persistent energy disruptions rather than expanding their monetary reserves.
The lack of significant central bank buying is not the only challenge facing gold.
Haworth said that the Federal Reserve’s tightening cycle is also creating a difficult environment for the non-yielding precious metal, particularly as higher real interest rates and a resilient U.S. dollar continue to limit investment demand.
Although the Federal Reserve is not expected to aggressively raise interest rates, he said policymakers remain committed to bringing inflation under control.
“They’re being emphatic about battling inflation, but they’re not being aggressive,” he said.
Haworth explained that the central bank is taking a measured approach to monetary policy, with modest interest-rate increases intended to reverse some of the accommodation provided during the previous easing cycle.
His firm’s economists expect another rate hike in December, followed by a further increase in March. However, he emphasized that the outlook remains dependent on incoming economic data, particularly inflation.
Haworth said the measured tightening cycle should be enough to keep the U.S. dollar relatively strong, creating another obstacle for gold prices.
While Treasury yields have declined from their recent highs, Haworth said lower borrowing costs have not been enough to generate significant buying interest in gold.
He added that investors continue to see opportunities in other asset classes, particularly equities tied to technological innovation and energy companies benefiting from the ongoing supply disruptions.
Haworth also sees limited potential for a significant recovery in physical gold demand from China and India, two of the world’s largest consumer markets for precious metals.
He noted that economic conditions in both countries remain challenging, limiting the ability of consumers to increase their gold purchases.
With central banks focused on energy security, consumers facing economic headwinds and the Federal Reserve supporting the U.S. dollar, Haworth said there is little evidence of a near-term catalyst that could drive gold prices significantly higher.
“I think there’s not a bullish story yet, which is interesting to me when you think about conflict and uncertainty,” he said.
He noted that geopolitical uncertainty would traditionally encourage investors to seek protection in gold, but the current conflict has created a different dynamic as higher energy prices reinforce inflation pressures and redirect capital toward more immediate economic needs.
Despite his cautious outlook, Haworth does not believe gold’s role as a strategic reserve asset has disappeared.
He said the potential for renewed central bank buying remains an important longer-term consideration, particularly as countries seek to diversify their reserves and reduce their reliance on individual currencies.
Haworth noted that China continues to seek greater independence from the U.S. dollar and the euro, but uncertainty surrounding trade flows and economic conditions makes it difficult to determine how aggressively central banks will rebuild their gold holdings.
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