LONDON - Gold’s historic rally has stalled, with spot prices falling approximately 25 percent from their January peak of $5,595 per ounce. The metal is currently trading near $4,000, pressured by intensifying expectations for Federal Reserve rate hikes and a strengthening U.S. dollar.
The reversal follows an oil-price surge triggered by the ongoing conflict in Iran, which has dampened bullion’s traditional appeal as a safe-haven asset. Aakash Doshi, head of gold and metals strategy at State Street Investment Management, noted that markets are currently digesting the risk of tighter monetary policy.
Technically, gold has broken below its 200-day moving average, a level now acting as resistance at $4,446. This shift signals a potential change in market dynamics after the metal surged 64 percent in 2025, marking its best performance in 46 years.
Despite the short-term volatility, long-term structural supports remain. Central bank buying, persistent fiscal deficits, and fragmented geopolitics continue to underpin the case for precious metals. However, near-term sentiment is weak, with exchange-traded fund outflows totaling 23 tons in May and early June.
Adrian Ash of BullionVault suggested that previous gains were heavily driven by rate-cut expectations, which have now reversed. With managed short positions on COMEX gold at their lowest since January 2025, analysts warn of further downside potential if bearish bets accumulate.
Physical demand remains sluggish, particularly in India, where bullion trades at a significant discount. Nicky Shiels of MKS PAMP expects prices to remain rangebound in the coming months until new strategic catalysts emerge.