Gold is losing its prestige

XAU/USD

Key zone: 4,000.00 - 4,100.00

Buy: 4,150.00 (on a strong positive fundamental basis); target 4,350-4,500; StopLoss 4,050.00

Sell: 3,950.00 (on a pullback following a retest of 4,050); target 3,700-3,650; StopLoss 4,050.00

A 28% decline in price confirms that January's peak in gold marked a critical market top. External pressures are now threatening the yellow metal's status as a safe-haven asset amid persistent technical resistance levels and escalating geopolitical tensions.

The second quarter of 2026 became the worst quarter for gold in the past thirteen years. In June alone, the price of physical gold fell by 10.02%. During this period, the metal briefly dropped below the $4,000 mark, while the latest lows matched levels last seen in November 2025.

To recap:

Gold continues to consolidate significant losses and remains under pressure below $4,050 as expectations of another Federal Reserve rate hike continue to build, supported by inflation concerns driven by rising energy prices. At the same time, the confrontation between the United States and Iran, along with Trump's new tariffs, continues to reinforce the U.S. dollar's status as the world's reserve currency, placing additional pressure on precious metals.

The current military conflict is benefiting oil while weighing on gold, which at first glance appears counterintuitive. It contradicts the market intuition that has developed over the past two decades, making an understanding of the underlying mechanism essential for determining future positioning.

This unusual market behavior is driven more by inflation than by fear. When a geopolitical shock passes through the energy channel, it pushes oil prices higher.

• This increases the overall Consumer Price Index (CPI), which raises inflation breakeven rates and, in turn, pushes nominal bond yields higher.
• If the central bank responds by maintaining restrictive monetary policy or tightening it further, real yields—government bond yields adjusted for inflation—also increase.
• Real yields remain the purest macroeconomic driver of gold prices because they reflect the opportunity cost of holding a non-yielding asset.
• When real yields rise, gold falls, regardless of how many news headlines mention missiles.

Gold is currently facing heavy selling pressure, with the primary driver coming from the interest rate market. Rising oil prices directly affect inflation expectations, making it less likely that the Federal Reserve will ease monetary policy and increasing the probability of further tightening. On Wednesday, the yield on the 10-year U.S. Treasury reached 4.695%, its highest level since January 2025. The two-year Treasury yield climbed to 4.334%, while the 30-year yield remained above 5%. Money markets are currently pricing in roughly a 78% probability of another rate hike in September. For an asset that generates no income, this is the decisive factor.

Volatility is increasing: central bank demand offsets monetary policy pressure.

Long-term demand from sovereign institutions and ongoing shifts in global monetary policy continue to provide support, but price action remains under pressure from persistent selling.

What does this mean?

Gold has failed to regain bullish momentum despite continued purchases by central banks and persistent geopolitical tensions.

The current state of the gold market remains highly fragile from both technical and fundamental perspectives. The risk of a breakdown below the $4,030 zone continues to increase. As long as sellers maintain firm control of the market and sentiment indicators remain divergent, gold could remain vulnerable to further declines unless the fundamental backdrop changes rapidly.

Nevertheless, the current macroeconomic headwinds may ultimately prove to be temporary noise. Persistent inflation risks and ongoing shifts in global monetary policy could eventually reinforce the medium-term bullish trend once again.

So we act wisely and avoid unnecessary risks.

Profits to y’all!