Gold finally mounted a comeback on Friday, June 26, but the rebound didn’t erase the bigger warning in the market.
Spot gold rose 1.2% to $4,073.78 an ounce, while August U.S. gold futures climbed 1.2% to $4,096.30, according to CNBC.
The move came just as the dollar eased off from recent highs following Thursday’s Personal Consumption Expenditures report, showing prices jumping 4.1% in the 12 months through May, matching economists’ forecasts.
However, the relief was narrow.
CME Group’s FedWatch Tool showed traders pricing about a 60% chance of a September rate hike, down from 64% earlier. Gold was still down 2.6% for the week and headed for a fourth straight weekly decline.
The question now is whether this is the start of a gold recovery or just another bounce inside a deeper sell-off.
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Why gold lost its safe-haven shine after the Iran shock
Gold’s sell-off after the Iran war looked counterintuitive, but markets weren’t exactly trading the conflict alone.
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The bigger force was inflation.
As oil prices jumped, investors worried that elevated energy costs could keep U.S. inflation sticky, pushing the Federal Reserve back toward a more hawkish stance.
Naturally, that hurt gold, as it’s not an income-bearing asset and usually struggles when traders expect higher rates, stronger bond yields, and a firmer dollar.
Of late, we’ve seen the dollar strengthen as rate-hike expectations rose, while gold broke below the $4,000 level earlier in the week.
So the war initially supported safe-haven demand, but the follow-through trade became all about oil, inflation, the Fed, and the dollar.
Gold and silver returns show a sharp pullback beneath a long rally
- Gold is down 10.43% over the past 30 days, losing $469.43.
- Silver has fallen harder, dropping 22.92% over 30 days, a decline of $17.34.
- Over the past 6 months, gold has been down 6.82%, while silver is down 18.08%, indicating silver’s sharper short-term volatility.
- The 1-year picture remains positive, with gold up 23.13% and silver up 62.03%.
- Longer term, both metals remain sharply higher, with gold up 126.25% over 5 years and 584.69% over 20 years, while silver is up 123.16% over 5 years and 458.18% over 20 years.
Source: Goldprice.org.
Big banks rethink gold’s path after the Iran shock
Gold price forecasts effectively turned into “what has to break right” following the Iran war inflation shock, which flipped the Fed rate-cut story.
Of the big banks, Goldman Sachs made the clearest reset.
According to Reuters, the bank cut its December 2026 gold target to $4,900 from $5,400, keeping a structurally constructive view. Goldman’s cut followed the bank’s abandonment of its earlier expectation of Fed rate cuts this year.
Bank of America hasn’t abandoned its $6,000 call, but it has pushed the timing out. According to Kitco, BofA’s Michael Widmer said hitting $6,000 “looks unlikely for now”, keeping his longer-term bull case linked to U.S. deficits and reserve diversification.
JPMorgan remains an outlier. Reuters previously reported that the bank expected gold to climb toward $6,000 by year-end as demand improves in the second half, but it now expects gold to reach the $5,243 level as its base case
Moreover, Deutsche Bank cut its Q4 base case to $4,800 and warned a three-to-four-hike scenario could drag gold towards $3,800.
Gold’s next test runs through $4,000
The $4,000 level has become the key technical level to watch for gold after the latest pullback.
Veteran analyst Ed Yardeni treats it as the next major support zone, as I covered recently.
After gold broke below its 200-day moving average of $4,443.40, Yardeni told clients the “next support is at $4,000″, arguing that the metal may need a deeper reset before another sustained leg higher.
Additionally, Tai Wong, an independent metals trader, told Reuters that gold has support “just under $3,900″, supported by central bank buying. That makes the $3,900 area the first real downside test if gold fails to reclaim and hold $4,000.
The more aggressive warning came from Mizuho’s Robert Yawger, who said Fed hawkishness could pressure gold’s “last gasp” support near $4,000, with stop-loss selling accelerating the move lower.
BTIG technical strategist Jonathan Krinsky offered a mixed read.
MarketWatch cited Krinsky as saying oversold signals could produce a tactical bounce, but the broader breakdown still leaves room for gold to fall toward its mid-2025 breakout zone near $3,400.
What gold investors should watch next
Looking ahead, gold investors will likely keep a close eye on several key economic reports as the safe-haven trade continues to fade.
The first big test is inflation.
The Bureau of Economic Analysis said on June 25 that the PCE price index rose 4.1% from a year earlier in May, while personal income and consumer spending both increased 0.7%. For context, the core PCE jump of 3.4% was the highest since October 2023. Hence, that setup keeps the Fed in play when inflation is coming in hot and demand is still firm.
The second test is labor. The Bureau of Labor Statistics said on June 5 that U.S. payrolls rose by 172,000 in May and unemployment held at 4.3%. A weaker June jobs report, pointing to softer hiring, could substantially reduce pressure on gold.
Another big test is demand. Reuters reported that India moved to a gold premium for the first time in six weeks, while China remained subdued.
The bullish setup needs cooler inflation, weaker jobs, a softer dollar, and a less hawkish Fed. Without that, gold rallies may keep getting sold.
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