The troy ounce is priced at $4,022, with a weekly drop of 2.54% and a monthly decline of 5.95%. The fear that the Fed will keep rates high due to oil inflation nullifies the safe haven effect of the conflict in the Middle East.
Gold is struggling to find its direction. Military tensions between the United States and Iran are intensifying, oil prices are soaring, yet the troy ounce seems more focused on the Federal Reserve than on the explosions in the Middle East. The precious metal is currently priced at 4,022.60 dollars, with a slight recovery of 1.06% from the previous close, but the weekly snapshot leaves little room for optimism: a decline of 2.54% in the last five days and a cumulative drop of 5.95% over the past month. Since January, the loss amounts to 7.16%.
Oil drives inflation and the Fed holds back gold
The origin of this atypical reaction lies in oil itself. The Iranian threat to block the Strait of Hormuz —through which nearly 20% of the world's crude oil passes— has driven WTI crude to 81.05 dollars and Brent to 87.01, with a weekly increase of nearly 12%. This energy price surge fuels inflationary fears and, with them, the expectation that the Fed will keep rates elevated for longer. For gold, which does not generate interest, that scenario is lethal: it raises its opportunity cost and strengthens the dollar, two headwinds that nullify the safe haven premium one would expect.
The White House has launched six consecutive nights of attacks on Iranian territory, and President Donald Trump has threatened to extend operations to key infrastructure if diplomatic contacts fail. Iran has responded with retaliatory attacks against US bases in Syria. Despite the seriousness of the conflict, investors are looking more at monetary policy than at the geopolitical chessboard. The head of the Fed, Kevin Warsh, reiterated his commitment to price stability, and markets now value a 51% probability of a rate hike in September, compared to lower expectations the previous day.
Central banks buy gold against the tide
While speculators flee, a structural force acts in the opposite direction. Central banks, led by Poland and China, continue to increase their gold reserves. A survey by the World Gold Council among 74 issuing institutions reveals that 45% expect to increase their holdings in the next twelve months, the highest percentage since measurements began in 2018. Only one entity plans to reduce its stocks. This official demand, unaffected by interest rate fluctuations, has prevented the metal from piercing the 4,000 dollars support more violently.
Technical indicators reinforce the view of a digestion phase rather than panic. The RSI stands at 40.7, far from the oversold zone. The current price is 6.5% below the 50-day average (4,304.19 dollars) and 11.4% below the 200-session average (4,540.10 dollars). The breadth of the movement suggests that the correction has been intense but not catastrophic. In fact, the ounce remains just 1.94% above the 52-week low, recorded at 3,901 dollars at the end of October 2025.
Silver and copper suffer the same punishment
Silver, which shares the same logic of a non-yielding asset, suffers even more. Its price has fallen to 55.58 dollars per ounce, the lowest level in eight months, with a monthly drop exceeding 20%. Copper, for its part, has dropped 0.41% to 6.26 dollars, weighed down by the same combination of high rates and a strong dollar. The paradox is complete: oil, the big winner of the crisis, becomes the indirect executioner of precious metals.
Short-term prospects depend on two factors: the evolution of the conflict in the Middle East and the signals emitted by the Fed in the coming weeks. If the situation in Hormuz worsens, crude could rise even further, reinforcing inflationary pressure and prolonging gold's agony. Conversely, a de-escalation would shift attention back to macro data and central bank demand, which remains the strongest anchor in the market. Until then, the precious metal dances between two logics that have rarely taken it in the same direction.
For the individual investor, the lesson is clear: in a high-rate environment, gold loses its appeal as a safe haven, even with wars underway. Those looking to protect themselves from inflation should monitor the Fed's decisions in September and the evolution of crude. Meanwhile, central bank demand offers a floor, but not an immediate bullish impetus.
You may also like
