Institutional investors have been reducing gold exposure, with ETF outflows persisting in recent weeks. The dollar, supported by widening rate differentials, has remained firm, adding to the pressure.
The combination has muted the traditional safe-haven response. Historically, geopolitical shocks like the current U.S.-Iran airstrikes offer only temporary support when macro headwinds are dominant. The ongoing airstrikes failed to boost gold prices specifically because of the headwinds from CPI data and China's slowdown.
Market participants now expect gold to consolidate below $4,100, with the near-term trading range centered around $4,080. A clearer direction may require either a dovish pivot from the Fed or an unexpected escalation in the conflict.
The lack of a sustained rally despite the airstrikes suggests that markets are more focused on the macro outlook than on geopolitical risk. This dynamic could persist as long as inflation remains elevated and the Fed maintains its hawkish posture.
- Spot gold price: $4,060 per ounce
- Gold futures trading range: $4,080
- Decline from all-time high: approximately 28%
- Drop from peak: 25%
- Daily price change: up to 1.4%
The U.S. dollar and U.S. government bonds have benefited from the rotation out of gold, as investors seek yield. Meanwhile, gold investors and gold ETFs have faced continued selling pressure. If the price weakness persists, mining companies could see lower profits and reduced capital investment, potentially affecting future supply.