Gold drops to two-month low despite renewed U.S.-Iran war tensions

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Gold drops to two-month low

Highlights

Spot gold fell about 1.6% to $4,385.85 an ounce, its lowest level since March 26.
U.S. gold futures declined 1.3% to $4,389.70.
UBS cut its year-end target to $5,500 but maintained a positive outlook.
Bank of America expects gold at $5,093 an ounce by year-end, about 16% above the current level.

Dollar and oil put pressure on gold

On Thursday, spot gold fell about 1.6% to $4,385.85 an ounce, reaching its lowest level since March 26. U.S. gold futures for delivery next month dropped 1.3% and settled near $4,389.70.

According to CNBC, the decline came after renewed uncertainty around the war between the U.S. and Iran. Events like this usually support gold as a safe-haven asset. But this time, the main impact came through oil and the dollar. Rising oil prices increased concerns that inflation could remain elevated for longer than expected. That, in turn, reduces the likelihood of a quick easing of monetary policy.

A stronger dollar also weighed on demand. Gold is priced in U.S. currency, so it becomes more expensive for buyers outside the United States when the dollar rises. Under these conditions, even geopolitical risk was not enough to prevent prices from falling.

Analysts are not writing off gold

Despite the sharp decline, major banks continue to hold a positive view on the metal. UBS reaffirmed its bullish outlook, although it recently cut its year-end price target to $5,500 an ounce from the previous $5,900. The bank believes gold could regain momentum if expectations for rate hikes begin to fade.

Mark Haefele, chief investment officer at UBS Global Wealth Management, said gold remains sensitive in the short term to news from Iran and the U.S., energy prices, U.S. bond yields and the dollar. In the medium term, however, the metal is supported by central bank demand, reserve diversification, high global debt and expectations of a softer Federal Reserve policy later this year.

Bank of America also sees upside potential. Its year-end forecast stands at $5,093 an ounce, about 16% above Thursday’s spot price. By the end of 2027, the bank expects the metal to fall to $4,925. Analysts cited a persistently strong dollar, higher real interest rates and increased scrap supply as risks to the forecast.

Inflation and rates move back into Focus

Investors are now shifting their attention to U.S. inflation data. Economists surveyed by Dow Jones expect the index to rise 0.5% month over month and 3.8% year over year. If the data comes in above forecasts, pressure on gold could intensify.

Other precious metals also fell. Silver lost about 2.4% to $72.85 an ounce, while futures held just above $73. Platinum declined 1.7% to $1,884.95, and palladium fell 1.7% to $1,366.70.

After a record 2025, when gold rose 66% and silver gained 135%, trading in 2026 has become much more volatile. The latest correction shows that gold’s safe-haven status does not always work automatically: if war lifts oil prices, strengthens the dollar and raises rate expectations at the same time, gold can come under pressure.

As previously covered, Bitcoin fаlls to April low as new U.S. strikes on Iran hit risk assets.

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