Gold tumbled on Monday, extending its losing streak to a third straight week, as stalled US-Iran diplomacy and fresh Middle East tensions rekindled inflation fears and pushed Treasury yields higher, clobbering the non-yielding metal. Spot gold fell as much as 1.8% to just above $4,500 an ounce in early trading, before paring the losses.
The selloff underscored a persistent paradox for bullion: a full-blown Middle East conflict that has kept energy prices elevated is now viewed largely through the lens of sticky inflation, rather than safe-haven demand. Since the outbreak of hostilities, gold has lost 13%, battered by the expectation that central banks, especially the Federal Reserve, will keep interest rates higher for longer to contain oil-driven price pressures.
“The latest news clearly didn’t give the market confidence that everything is going to be okay and again raised the specter of inflation issues, along with fairly hawkish signals to the market on interest rates,” said Bart Melek, global head of commodity strategy at TD Securities, in a note.
Investors dumped gold as the US-Iran deal remained deadlocked, with US President Donald Trump describing Iran’s latest proposal as less than satisfactory. At the same time, tensions flared around the Strait of Hormuz, a chokepoint for a fifth of global oil shipments. Iran claimed it forced a US warship to turn back from the strait, but a US official denied a report that the vessel had been struck by Iranian missiles, according to an Axios report. The episode sent Brent crude surging 5.8% to $114.44 a barrel, which in turn pushed the 10-year Treasury yield about 6.5 basis points higher to near 4.44%, with yields touching 4.467% intraday. The US dollar index firmed to 98.472, adding further pressure on dollar-denominated gold.
Fresh US data reinforced the higher-for-longer rate narrative. The Census Bureau reported that March factory orders rose 1.5% to $630.4 billion, well above the 0.5% consensus estimate. That followed Friday’s ISM data showing the manufacturing PMI at 52.7%, marking a fourth straight month of expansion. The resilient numbers took the edge off any immediate repricing of rate-cut expectations.
Technically, spot gold is now battling to hold the $4,502.40 support level. A break below that would expose $4,485 and then $4,450. To regain momentum, bulls need to push prices back above the $4,530–$4,568 resistance zone, with a sustained move targeting $4,615 and the session high of $4,630.70.
In the near term, traders are on high alert for this week’s US Treasury borrowing plans, a slate of Fed speakers, and a packed economic data calendar, all of which could offer clues on the rate trajectory. The minutes of the April 28-29 FOMC meeting are due May 20, while the Fed’s Senior Loan Officer Opinion Survey is scheduled for May 4. The overarching question for markets is whether higher oil prices are merely delaying the next easing cycle, rather than derailing it entirely.
Despite the near-term gloom, the longer-term bull case for gold remains intact. According to the World Gold Council, central banks added to their gold reserves at the fastest pace in more than a year in the first quarter. Deutsche Bank recently argued that the aggressive pivot toward bullion, especially among emerging-market central banks, could propel gold to as high as $8,000 an ounce within five years. For 2026, Goldman Sachs and JPMorgan have set price target sat $5,400 and $6,300, respectively.
For now, however, the prevailing view is that the bottom is not yet in. Recent analyses indicate that while gold has surged over the past year to new records, it has also encountered sharp corrections and persistent volatility. Analysts suggest current levels are not the top, and the market may continue to evolve as inflation fears and geopolitical uncertainty tug prices in opposing directions. The consensus: gold isn’t done falling yet.
