Gold Falls Below $5,000 as Middle East War Fuels Oil Surge and Rate Cut Fears

TLDR

• Gold dropped below $5,000 an ounce, extending two straight weeks of losses
• Rising oil prices above $100 a barrel are pushing inflation fears higher
• The US-Israel conflict with Iran has entered its third week with no end in sight
• The Federal Reserve is widely expected to hold rates steady this week
• Gold is still up more than 15% in 2026 despite recent weakness

The US military struck Iran’s Kharg Island oil terminal last weekend. That attack — and Iran’s retaliatory strikes on Israel and energy infrastructure in the Gulf — pushed crude oil above $100 a barrel.

Gold fell 0.6% to around $4,987 an ounce in early London trading on Monday. That puts the metal below the key $5,000 mark for the first time in recent sessions.

The conflict is now in its third week. An aide to President Donald Trump said the war could last four to six weeks, though both sides have given mixed signals about a potential deal.

Iran struck shipping lanes near the Strait of Hormuz over the weekend. That waterway carries roughly one-fifth of the world’s oil and liquefied natural gas, and shipping there has nearly come to a standstill.

Oil prices fluctuated above $100 a barrel on Monday. Higher energy costs are feeding inflation concerns and making the Fed less likely to cut interest rates in the near term.

When rates stay high, gold becomes less attractive. The metal pays no interest, so rising borrowing costs tend to push investors toward yield-bearing assets instead.

Why Gold Is Under Pressure

Traders now see virtually no chance of a rate cut at this week’s Fed meeting. That expectation is one of the main weights on the gold price right now.

US consumer spending data released last Friday showed spending barely grew in January. Consumer sentiment has also dropped to a three-month low, as worries about gasoline prices mount.

Gold has still gained more than 15% so far in 2026. But upward momentum has stalled as the market waits to see how the conflict develops and whether the Fed signals any change in direction.

Silver fell 2.2% to $78.79 an ounce. Palladium was steady. Platinum edged higher. The Bloomberg Dollar Index slipped 0.2% after gaining more than 1% the prior week.

UBS Global Wealth Management said in a note Monday that gold acts more as a hedge against broader economic risks than direct war threats. The bank said gold protects against currency devaluation, rising deficits, and economic slowdowns — all possible outcomes of a prolonged conflict.

What the Charts Are Saying

Technical analysis points to further short-term weakness. Gold broke below the $5,035 support level on Monday and analysts are watching the $4,953 level as the next key target.

The MACD indicator is below the centreline and pointing lower. The Stochastic oscillator also supports a bearish short-term view.

A corrective bounce toward $5,200 is possible if any central bank meeting this week delivers a dovish surprise, according to technical forecasts. Beyond that, bulls would need to retake $5,412 to signal a resumption of the longer-term uptrend.

The Fed decision is due this week along with rate announcements from central banks in the Eurozone, UK, Japan, Switzerland, Australia, Canada, China, Brazil, and Russia.

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