TLDR
- Gold hit a 1.5-month low, touching $4,480 an ounce before recovering slightly to around $4,541
- Rising global bond yields are pressuring gold as markets price in higher interest rates driven by war inflation
- The US and Iran remain far apart on a deal to reopen the Strait of Hormuz
- A drone strike near a UAE nuclear plant raised fears of conflict escalation
- JPMorgan analysts say new investment interest in gold has “dried to a trickle”
Gold is under pressure as the ongoing US-Iran conflict continues to push inflation fears higher, sending bond yields surging and weakening the metal’s appeal to investors.
Spot gold fell to an intraday low of $4,480.79 an ounce on Monday before recovering to around $4,541. That marks a 1.5-month low, and the metal has now fallen 14% since the conflict began.
Gold futures also dropped 0.5% to $4,540.67 an ounce during Asian trading hours.
Rising Yields Weigh on Gold
Bond markets sold off sharply around the world on Monday. US 10-year Treasury yields climbed to a one-month high, while Japanese 10-year yields hit a 29-year high.
Investors are pricing in the possibility that central banks will raise interest rates to fight energy-driven inflation caused by the Middle East war.
That is bad news for gold. When interest rates rise, the cost of holding a non-yielding asset like gold goes up, making it less attractive compared to bonds.
The dollar also firmed, which added further pressure on metal prices. Silver fell 0.5% to $76.61 an ounce after dropping more than 5% last week. Platinum fell 0.5% to $1,968.10 an ounce.
Hormuz Deadlock Continues
The Strait of Hormuz remains a major sticking point. The waterway is a critical route for global energy flows, and its partial closure has pushed oil prices higher.
President Trump renewed threats against Iran on Monday, which sent oil climbing. That raised the odds of further rate hikes, putting more pressure on bullion.
“For Iran, the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them. TIME IS OF THE ESSENCE!” – President Donald J. Trump pic.twitter.com/33gyF0c0O5
— The White House (@WhiteHouse) May 17, 2026
A drone strike near the UAE’s Barakah nuclear plant over the weekend was attributed to Iran. The attack raised concerns that the fragile ceasefire could break down entirely.
The US and Israel are reportedly considering renewed military action against Iran as peace negotiations stall.
Trump’s recent summit with Chinese President Xi Jinping produced some trade agreements, but provided no progress on the Iran situation.
Analyst Views and Demand Outlook
JPMorgan analysts including Gregory Shearer said in a client note that new investment interest in precious metals has “dried to a trickle.” They cited fears over higher interest rates as the main reason.
The analysts said a resolution to the conflict is needed to revive demand. Central bank buying could provide some support in the near term.
India’s gold demand has also weakened. Bullion imports have slowed due to stricter import policies and higher duties. India also tightened rules around silver imports over the weekend to defend its currency, which hit an all-time low.
Traders are now watching the Federal Reserve’s April meeting minutes, due this week, for any guidance on the path of US interest rates.
Gold has largely underperformed since the conflict began, as rate concerns have outweighed the metal’s traditional role as a safe haven.
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