Gold Stumbles at $4,500 as Oil Surge and Dollar Strength Override Geopolitical Tailwinds
01.06.2026 - 12:21:49 | boerse-global.de
The yellow metal entered the new week on the back foot, slipping to between $4,514 and $4,518 an ounce in early Monday trading—a drop of 0.4 to 0.9 percent from Friday’s close. The psychologically critical $4,500 level held, but just barely, as a resurgent dollar and surging crude prices overwhelmed the safe-haven pull from escalating Middle East tensions.
Brent crude climbed above $93 a barrel and briefly neared $96, sending inflation expectations higher and reinforcing bets that the Federal Reserve will keep monetary policy tight. The fed funds rate has sat at 3.50–3.75 percent since the last cut on December 10, 2025, and the data now points to a possible hike. According to the CME FedWatch Tool, the probability of a rate increase by year-end stands at 47.4 percent, while a cut is priced at just 0.6 percent—a remarkable shift from the dovish outlook earlier this year.
The negative correlation between gold and oil has become unusually pronounced. Instead of sparking a flight into hard assets, rising energy costs are fanning inflation fears that strengthen the dollar and make bullion more expensive for overseas buyers. That dynamic has left the precious metal behaving more like a risk asset, even as the Strait of Hormuz remains effectively closed and regional conflicts intensify.
Should investors sell immediately? Or is it worth buying Gold?
Traffic through the Strait—which normally carries about 20 percent of the world’s oil and 20 percent of its LNG—has fallen to roughly 5 percent of pre-conflict levels since February 28, 2026. Over the weekend, Washington and Tehran exchanged draft agreements aimed at extending the ceasefire and reopening the waterway, but the outcome remains uncertain. Meanwhile, military operations in Lebanon continued to escalate, and the fragile pause between Iran and its regional rivals hung in the balance ahead of a U.S. decision on whether to extend it.
The Fed’s steadfastness adds another layer of pressure. The central bank left rates unchanged at its April 29 meeting for the third consecutive time, and the June 16–17 FOMC meeting will bring fresh projections and an updated dot plot. Markets are now focused on the ISM manufacturing index due Monday and the U.S. jobs report later in the week for clues on whether the economy can withstand further tightening.
Physical demand in Asia offered little support. In India, elevated prices and import duties kept buyers on the sidelines, while Chinese premiums narrowed amid cautious sentiment. Despite the near-term weakness, gold remains 34 percent higher year-on-year and is down only about 0.8 percent in May. Analysts point to three structural pillars—the effective closure of the Strait of Hormuz, ongoing central bank purchases, and Fed policy—though only one of those is currently working in gold’s favor. On the charts, a breakout above $4,550 would be needed to shift momentum, while the 200-day moving average looms as key support below the current level.
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