- Gold has been caught in a broader risk-off wave amid escalating tensions in the Middle East, which are triggering market-wide selling pressure.
- Despite the correction, JPMorgan analysts remain bullish on gold in the long term, stating that the backdrop for the yellow metal will quickly flip materially bullish.
- Analysts at ING Think noted that geopolitical stress alone is not enough to lift the demand for gold.
Gold prices recovered partially on Monday after President Donald Trump announced that attacks on Iran’s energy infrastructure had been postponed for five days.
Gold prices hovered around $4,450 per troy ounce on Monday after falling to under $4,100 as the “sell everything” trade gripped markets amid intensifying tensions in the Middle East.
Gold futures maturing in June tumbled more than 10% before recovering some of the losses. However, futures were still down more than 2% to hover around $4,500.
President Trump announced on Monday that he has instructed the Department of War to postpone all military strikes against Iran’s power plants and energy infrastructure for five days.
Despite this, spot gold prices are down nearly 15% over the past month.
The SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) ETFs were down about 1% at the time of writing.
Gold Caught In The Crossfire
Gold has been caught in a broader risk-off wave as the escalating Iran war triggers market-wide selling pressure.
“This is an extremely brutal flush. But from our perspective, what it's telling us is more about gold getting caught up in a contagion risk of a sell everything trade,” said JPMorgan’s head of base and precious metals strategy, Greg Shearer.
Gold and silver both started 2026 on a strong note, rising 25% and 64% respectively in January before the correction began. Since the peak in January, spot gold and silver prices are down by 18% and 41%, respectively.
“I think there’s concern in the market that the combination of economic, energy, and FX pressures could trigger a sea change in central bank gold flows and buying behavior,” Shearer added. However, JPMorgan analysts remain bullish on gold in the long term, stating that the backdrop for the yellow metal will quickly flip materially bullish.
Iran War Increases Higher-For-Longer Rate Expectations
Analysts at ING Think noted that geopolitical stress alone is not enough to lift the demand for gold.
“Safe-haven demand has been overshadowed by higher energy prices, a stronger dollar and shifting rate expectations,” the firm said in a recent note.
It added that the fall in gold prices since the beginning of the Iran war last month highlights how macroeconomic factors, particularly interest rates, the US dollar and cross‑asset positioning, continue to dominate short‑term price dynamics.
“What matters is how such shocks feed through to inflation, monetary policy and the dollar. In the near term, a stronger US dollar and gold’s high liquidity can make it a source of funds during stress episodes,” the firm added.
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