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Gold prices fell back towards the $4,000-an-ounce level on Monday as renewed tensions between the US and Iran sparked concerns over prolonged periods of inflation.
Spot gold declined as much as 1.8% to just above $4,000/oz., as the metal continues to trend downwards amid geopolitical turmoil in the Middle East.
Since the war started in late February, bullion has fallen by more than 22%, driven by surging energy prices that raised expectations of higher interest rates to combat inflation, a scenario that hurts gold.
Despite having surged to a record six months ago, the precious metal has now wiped out its entire gains on the year and is now down by 6%, a sharp contrast from the 60% rise in 2025.
Still, many see gold maintaining its value and even recovering in the coming months, with the expectation that central banks will continue buying the metal as they have done in recent years. Major banks including Goldman Sachs and UBS have all set year-end price targets above current levels, implying a rebound in the second half.
In the short term, the $4,000 level has been pegged as a major support. Gold holding that level, despite renewed signs of tensions in the Gulf, “suggests marginal dip buyers have returned and are willing to defend this level,” Justin Lin, an analyst at Global X ETFs Australia, told Bloomberg.
“I expect gold to become increasingly resilient to Middle East volatility, especially now that it has completely erased year-to-date gains and fast-money investors have likely largely moved on,” he added.
The latest developments in the Middle East come in the wake of US inflation data last week that, while high, fell within analyst estimates.
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