Gold Bounces from November Lows as Iran Tensions Ease, Yet Inflation Data and Rate Hike Bets Loom Large
12.06.2026 - 14:52:36 | boerse-global.de
Gold has clawed back sharply from its worst levels in six months, staging what market technicians call a “key reversal day” after a brutal sell-off sent the precious metal to $4,024 an ounce on Thursday. The metal has since bounced to around $4,232, but the weekly loss still stands at nearly 3% and the broader picture remains clouded by rate-hike fears and conflicting signals from the diplomatic front.
The trigger for the rebound was an abrupt shift in geopolitical risk. US President Donald Trump announced via Truth Social that he had called off planned military strikes against Iran, citing a breakthrough in high-level talks involving Saudi Arabia and Israel. The news prompted a wave of short-covering as bearish traders who had piled into short positions below key support levels were caught in a squeeze. Gold rose as high as $4,175 intraday on Thursday and pushed above $4,200 on Friday.
Yet the supposed peace breakthrough is far from certain. Iran’s foreign ministry has sharply denied that a final agreement has been reached, contradicting Trump’s claim that both sides plan to sign a memorandum of understanding in Europe over the weekend. The deal, as described by US officials, would include the reopening of the Strait of Hormuz. But Tehran says it has not yet made a final decision, leaving the market in a state of high volatility.
Gold closed on Friday at $4,172.50, marking a weekly decline of just over 4%. Since the all-time high struck in January, the metal has now lost nearly 26% of its value. The relative strength index has fallen to 30.9, hovering just above the oversold threshold.
Should investors sell immediately? Or is it worth buying Gold?
The diplomatic relief, however tenuous, has removed a significant chunk of gold’s geopolitical risk premium. But it does nothing to address the inflation problem that continues to dog the metal. Fresh US producer price data for May showed a 6.5% year-over-year surge, coming on top of an already red-hot consumer price report from the previous week. The labor market remains robust, with 172,000 new jobs created in May. Together, these data points have pushed the probability of another Federal Reserve rate hike before year-end above 60%, as priced by futures markets.
Rising real yields are a direct headwind for gold, which offers no yield. The European Central Bank added to the pressure on Thursday by raising its benchmark rate to 2.25%. Meanwhile, gold’s 50-day moving average sits at roughly $4,600 — a full $400 above the current spot price — underscoring the technical damage inflicted since the January peak.
Providing a floor under the sell-off is the steady buying from central banks, particularly China’s. The People’s Bank of China added another 10 tonnes to its gold reserves in May, marking the 19th consecutive month of purchases. Its total holdings now stand at about 2,331.5 tonnes. This structural demand has repeatedly cushioned sharp declines in recent months, but it has not been enough to reverse the downward trend.
Gold at a turning point? This analysis reveals what investors need to know now.
The coming days will be decisive. If the US and Iran do sign an agreement, the geopolitical risk premium could evaporate further, sending gold lower. If the deal falls apart, the year low of $3,901.30 becomes the next critical support level. Either way, the tug-of-war between rate-hike expectations and physical buying is far from over.
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