Gold prices edged lower in early Monday trading, slipping to just below the $5,000 level. The precious metal has been under pressure since shortly after the start of the war in Iran. Initially, there was a modest surge in safe-haven demand that pushed gold prices to a multi-week high, but those gains proved short-lived. The main focus for financial markets at present is the looming energy crisis caused by the disruption building up in the Strait of Hormuz, which has taken around 20% of the world’s oil and gas supply offline, driving prices higher and reviving the spectre of inflation. Against this backdrop, markets have reduced their expectations for Federal Reserve interest rate cuts in 2026. This shift is also reflected globally in a more hawkish outlook among other central banks, diminishing the appeal of non-yielding assets such as gold. The longer the war in Iran continues with the Strait of Hormuz effectively closed, the greater the weight of inflation fears on investors’ mindset. Despite gold’s traditional role as a safe-haven asset and its enhanced appeal during times of conflict, investors may increasingly focus on inflation risks, in a dynamic that reduces the likelihood of central bank rate cuts and putts pressure on bullion prices due to the metal’s non-yielding nature.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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