Gold’s narrative through 2026 has been
far from simple. Following an unprecedented spike to above $5,595 per ounce in late
January, XAU/USD has been involved in a very choppy stair-step
correction since then, with the latest low near $4,024 in mid-June the lowest
since late November 2025.
For traders following this pair, the question isn’t
only “Is gold falling?” but also “What is behind gold’s
inability to find support despite a seemingly favourable geopolitical
landscape?”
Real Yields Making All the
Difference
With gold providing no yield at all,
the reason for trading the precious metal CFDs rather than something that
offers yield becomes evident. The better-than-expected jobs report early in
June and the surprisingly hot CPI readings have pushed the
market to revise its Fed expectations from rate cuts to a hold and even to a
possible raise. Consequently, the real yields on Treasuries have risen, and any
increase in the rate decreases the attractiveness of non-yield gold.
Firming USD Adds to the
Pressure
Since the XAU/USD currency pair is
expressed in US dollars, an appreciating US dollar may make gold relatively
more expensive to purchase in other currencies; hence, it may reduce
price-sensitive physical demand for the metal. As the Dollar Index climbs past
the 100 mark while yields are increasing, it creates a “twin headwind
scenario”, which was one of the factors responsible for the biggest
decline in gold prices on a monthly basis since 2013 in March.
Central Bank Demand: Calm on
the Surface, but Underneath…
Central banks have been one of the key drivers of the rise in gold prices between 2025 and
2026. The purchases made by these central banks have roughly doubled
their historical averages. The activity has recently become choppier, with some
banks, such as Türkiye, reducing their positions in Q1. However, these reported
numbers may underestimate actual activity, as not all purchases are known.
Geopolitical Risks Have
Double Impact
In most cases, the risks of conflict
and uncertainty are what drive most investors towards safe-haven assets such as
gold. However, in the case of the ongoing geopolitical tensions associated with the Strait
of Hormuz, the impact of the situation has been more negative than
positive for the precious metal since concerns over oil-driven inflation
prevent the Fed from cutting interest rates, and the latter is damaging gold
much more than the positive sentiment associated with safety. This shows that
the connection between gold and geopolitical risks is conditional.
Implications for Gold Trading
None of this suggests a single clear
trend. Target prices from different analysts for the coming months range
widely, while gold itself has proven that it can easily shift by hundreds of
dollars due to a single surprise in economic data. It is precisely this
volatility that makes active traders focus on gold/US dollar at the moment and
underlines the importance of speed and accuracy of execution and analytics.
With JustMarkets, you can trade gold CFDs with
competitive spreads from 0 pips, flexible leverage up to 1:3000, fast order
execution, real-time market analysis tools, and a 24/7 multilingual support
team – built for exactly these kinds of fast-moving sessions.
Risk Warning: For informational purposes only. Trading
financial instruments involves significant risk and may not be suitable for all
investors. Ensure you understand the risks involved and trade responsibly.