Gold slides more than 1% as U.S.-Iran strikes escalate

Gold fell more than 1% on June 1 as renewed U.S.-Iran military strikes strengthened the dollar and undercut safe-haven demand for the precious metal.

Gold fell more than 1% on Monday as fresh U.S.-Iran military strikes over the weekend boosted the dollar and undercut safe-haven demand, extending a correction that has left bullion 19% below its January record.

"The escalation reintroduces the inflation overlay that has suppressed gold since the Iran war began in late February," said Thomas Winmill, portfolio manager at Midas Funds.

Spot gold traded at $4,519.28 per ounce as of 01:59 a.m. ET, down 0.41% from Friday's close, while August COMEX futures slipped 1% to $4,547.70, according to exchange data. The metal is now 19% below its Jan. 29 all-time high of $5,595.42 and roughly 13% below where it traded when the Iran conflict erupted in late February. The U.S. Dollar Index reached one-month highs near 99.05, with the 10-year Treasury yield at 4.47%, creating a hostile cross-asset environment for non-yielding bullion.

The 200-day moving average at $4,340 represents the structural floor that has held throughout the post-January correction, while the 50-day at $4,730 has capped rallies for weeks. The May nonfarm payrolls report on June 5 is the next catalyst that could shape Fed rate expectations and determine whether gold tests either boundary.

Oil-CPI-Fed Mechanism Keeps Gold in a Range

The weekend strikes — which saw the U.S. attack Iranian military sites and Tehran retaliate — pushed Brent crude above $93 per barrel and WTI near $90, according to market data. Higher energy prices keep the inflation overlay alive, reducing the probability of Federal Reserve rate cuts. Fed funds futures are pricing a 25% chance of a quarter-point hike by December, per CME FedWatch data, which supports the dollar and weighs on gold.

Deric Ned, founder and CEO of Ridgemont Metals, said gold is likely to trade between $4,400 and $4,800 in June. "If the Iran situation escalates or the dollar rolls over, $4,800 plus is in play," he said. "If inflation prints hot again and the Fed gets hawkish, we retest $4,400."

Central bank demand, the primary structural pillar of the gold bull case, has moderated but remains elevated. JPMorgan cut its 2026 central bank purchase forecast to 640 tonnes from 800 tonnes, citing reduced tonnage needs at elevated prices. Even so, 640 tonnes remains above the pre-2022 average of 400 to 500 tonnes annually, and China's PBoC added 160,000 troy ounces in March, the largest single-month purchase in over a year, according to JPMorgan data.

Institutional price targets still point higher. JPMorgan holds a $6,300 year-end target, Wells Fargo sees $6,100 to $6,300, and UBS sits at $5,900. The Reuters poll of 30 analysts produced a median forecast of $4,746 — essentially current spot — suggesting the consensus expects sideways action while high-conviction houses anticipate a major upside re-rate.

This article is for informational purposes only and does not constitute investment advice.