Gold prices dipped below the $4,700 threshold on Monday, as the market braced for the Federal Reserve's upcoming policy decision and geopolitical tensions showed no signs of easing. Spot gold fell 0.6% to $4,682.13 per ounce by 1:50 p.m. EDT, while June Comex futures settled 1% lower at $4,693.70. The precious metal's retreat was driven by a combination of lingering oil price jitters and the lack of progress in U.S.-Israeli talks with Iran, which have kept investors on edge.
Fed Policy Uncertainty Weighs on Gold
The Federal Reserve is widely expected to keep interest rates unchanged at 3.50%-3.75% when it concludes its two-day meeting on Wednesday. However, the central bank's forward guidance remains a key focus, as persistent energy-driven inflation could force policymakers to consider further tightening. Gold, which offers no yield, tends to lose its appeal in a high-rate environment, even as safe-haven demand remains robust. TD Securities' Bart Melek noted that uncertainty surrounding the reopening of the Strait of Hormuz is creating a challenging backdrop for gold and silver.
Analysts Raise 2026 Forecasts to Record High
Despite Monday's pullback, the longer-term outlook for gold remains bullish. A Reuters survey of 31 analysts and traders raised the median 2026 gold forecast to $4,916 per ounce, the highest recorded by Reuters since 2012. StoneX's Rhona O'Connell suggested that a potential peace deal could trigger a relief rally, while Julius Baer's Carsten Menke argued that the war premium is not a lasting development. Independent analyst Ross Norman highlighted that central bank demand for gold is stronger than ever, though O'Connell cautioned that a move to $5,500 would be too aggressive.
Technical Indicators Signal Weakening Momentum
From a technical perspective, gold's near-term outlook appears cautious. According to Economies.com, gold is trading below the 50-period exponential moving average (EMA50) and remains constrained by a short-term descending trendline. Relative strength indicators have rolled over after flashing overbought conditions, a classic sign that momentum is fading. Jim Wyckoff of Kitco noted that traders are closely watching the $4,700 level, which has become a key support zone for Comex gold futures.
Broader Precious Metals Complex Declines
The weakness in gold was mirrored across the precious metals complex. Silver fell to $76 per ounce, while platinum and palladium also declined, settling at $1,999 and $1,481, respectively. Despite Monday's pullback, precious metals remain significantly higher than a year ago, with gold up roughly $1,358 from the same period in 2025.
Market Outlook: Geopolitics and Inflation in Focus
The path ahead for gold is highly dependent on the interplay between geopolitical developments and monetary policy. A diplomatic breakthrough involving Iran and the Strait of Hormuz could cool energy markets and reduce gold's safe-haven appeal. Conversely, a prolonged oil shock risks keeping inflation elevated, forcing the Fed to maintain its current stance and putting continued pressure on non-yielding assets like gold. For now, bullion remains caught between its traditional supports—geopolitical risk and central bank buying—and the headwind of a Fed contending with stubborn inflation.
