Gold Falls to 2026 Low as US-Iran Conflict Lifts Rate Fears; Rebound Hopes Grow as Tensions Ease
Summary
- The report said gold prices fell to their lowest level of the year as the prolonged US-Iran conflict, a surge in global oil prices, and rising odds of interest-rate hikes weighed on the market.
- It said that as the US-Iran conflict entered a lull, pressure from Brent futures prices and Treasury yields eased, while KRX gold prices recovered to the 190,000-won range.
- The market also sees the downward stabilization of global oil prices as a factor that could ease headwinds for the gold market and create a buy-the-dip opportunity.
Forecast Trend Report by Period
Gold prices fell to their lowest level of the year as the prolonged conflict between the US and Iran drove up oil prices, stoking inflation concerns and dimming hopes for interest-rate cuts. More recently, however, signs of easing tensions in the Middle East have fueled expectations of a rebound.
According to the Korea Exchange, spot gold on the KRX gold market (99.99%, 1 kilogram) settled at 189,810 won on July 24, down 5.85% from 201,600 won a month earlier. It was the lowest level of the year.
The drop in domestic gold prices came as concerns over higher-for-longer interest rates, fueled by a surge in crude prices, coincided with geopolitical risks. Compared with the annual high of 269,810 won on Jan. 29, the July 24 close was down 29.65%, Korea Exchange data showed.
Gold had rallied earlier this year on inflation concerns, geopolitical risks and increased buying by central banks. But prices turned lower as investors took profits after a sharp first-half run-up. Even during the recent US-Iran clash, demand for gold as a haven did not rise meaningfully.
Market participants cited the pressure from higher interest rates linked to soaring oil prices as the main reason gold fell despite the war. After renewed confrontation between the US and Iran pushed Brent crude above $100 a barrel, the yield on the 10-year US Treasury note topped 4.7%, the highest in a year and a half. Investors focused on oil-driven inflation, reviving the prospect of Federal Reserve rate hikes and reducing the appeal of non-yielding gold.
Still, hopes for a recovery in gold prices are rising as tensions between the US and Iran entered a lull from July 24. With Oman mediating talks between the two sides, airstrikes were halted and Brent futures fell to around $87 a barrel. As of 1:25 p.m. on July 27, KRX gold had risen 1.26% from the previous trading day to 192,210 won, recovering the 190,000-won level.
That has led to views that stabilizing oil prices could ease pressure on the gold market and be seen as a buy-the-dip opportunity.
Kim So-yeon, Hankyung.com reporter sue123@hankyung.com
Korea Economic Daily
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