Gold has come under pressure as oil-led inflation keeps real interest rates high, which raises the cost of holding a non-yielding asset. Demand from institutions, ETFs and central banks has weakened since the start of the war.
Gold often rises with inflation, but tends to struggle when policy tightens and real rates increase, as seen in 1979–82. A negative supply shock may keep policy restrictive and real carry elevated.
Key Market Concerns
Market worries include stagflation and higher rates across the yield curve, which have weighed on metals. Since the conflict began, gold is down about $700/oz (–13%), silver has fallen $21/oz (–22%), and copper is flat despite a deep market deficit.
Some central banks have slowed buying due to war-related liquidity constraints and may wait for lower prices. Technical support is near the 200-day moving average at about $4,258, and oil at $150/b could push gold towards that level.
If support around $4,258 holds and oil prices steady, gold is expected to recover towards $5,200 by year-end. The article was produced using an AI tool and reviewed by an editor.
The pressure on gold continues as stubbornly high oil prices, now trading around $115 a barrel, keep inflation elevated. The latest CPI data for March 2026 showed a hotter-than-expected print of 4.5%, reinforcing the idea that monetary policy will remain restrictive. This environment keeps real interest rates high, increasing the cost of holding non-yielding gold.
Trading And Technical Levels
We are seeing this play out in institutional demand, with gold-backed ETFs recording net outflows of over 50 tonnes in the first quarter of 2026. This situation mirrors what we observed in the 1979-82 period when aggressive policy to fight inflation weighed on the metal. Consequently, central bank buying has also remained subdued since the conflict began back in 2025.
For derivative traders, the key technical level to watch is the 200-day moving average, currently sitting near $4,310. A sustained break below this support could be triggered if oil prices spike toward the $150 mark discussed last year. This suggests that short-term positions or buying protective puts could be a prudent strategy against further downside in the coming weeks.
However, the longer-term uptrend could remain intact if this support level broadly holds. We anticipate a recovery back towards the $5,200 range by the end of the year, similar to the forecast made in 2025. Traders should watch for signs of oil prices stabilizing and inflation data pointing lower as a signal to consider long-term call options or futures positions for later in the year.
