Gold Slumps to $4,500 on Twin Blows: Iran Conflict and Rising Rate-Hike Odds
26.05.2026 - 19:31:56 | boerse-global.de
Gold has shed more than 17% since touching a January high of $5,450, and Tuesday’s slide to around $4,500.90—a 0.5% drop from the previous close—underscored how two powerful forces are squeezing the metal from opposite sides. After briefly trading near $4,515 earlier in the session, bullion gave up ground as escalating Middle East hostilities and a hawkish repricing of Federal Reserve policy combined to erode its safe-haven appeal.
The geopolitical catalyst came from US airstrikes on Iranian missile positions and mine-laying boats in the Strait of Hormuz, which the Pentagon characterized as self-defense. Iran’s Revolutionary Guards retaliated by shooting down a US MQ-9 Reaper drone. Despite diplomatic efforts that US Secretary of State Rubio described as requiring "a few more days" of talks and President Trump called "progressing well," the market reaction was paradoxical for gold. Armed conflict typically drives demand for havens, but this time investors booked profits as the escalation strengthened the dollar and lifted oil prices—both headwinds for bullion. West Texas Intermediate and Brent crude both advanced on supply concerns, adding to inflationary pressures that further complicate the Fed’s path.
On the monetary policy front, the case for higher rates hardened. The CME’s FedWatch Tool now shows a probability of over 56% for a rate increase before the end of 2026, while other market measures put the chance at 40-45%. Either way, expectations for any rate cuts next year have all but evaporated. Gold, which offers no yield, suffers acutely when bond yields rise and the dollar strengthens. The US Dollar Index has climbed 1.3% over the past three months, making dollar-denominated gold more expensive for overseas buyers. The pain spread to other precious metals: silver tumbled 2.1% to $76.45 an ounce, and platinum slipped 0.6% to $1,955.
Should investors sell immediately? Or is it worth buying Gold?
Against this short-term gloom, major banks see structural supports that could revive the metal later in the year. JPMorgan lowered its 2026 average forecast from $5,708 to $5,243 but left its year-end target at $6,000, citing the return of institutional investors and sustained central bank buying in the second half. UBS echoes that view, pointing to high US sovereign debt and persistent budget deficits as long-term catalysts that should keep gold attractive as a hedge. For now, however, rising oil prices, sticky inflation, and a determinedly hawkish Fed form a punishing environment. Whether central bank purchases actually materialize in H2 will determine how far gold can recover from current levels.
Separately, GoldMining Inc. announced the start of an exploration drilling program at its Yarumalito project in Colombia. The campaign will involve diamond core drilling over approximately 1,200 meters to test a new geological model and expand the known gold-copper mineralization, which currently hosts an estimated 1.23 million ounces of gold. Historical drill results returned intervals of more than 250 meters with grades between 0.50 and 0.51 grams per tonne. While the outcome of the drilling will unfold over the coming weeks, for the gold price itself, events in Tehran and Washington remain far more decisive than any exploration in the Andes.
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