Gold Is Under Pressure — Is the Bull Run Losing Steam?

Gold is back in the spotlight. Despite escalating geopolitical tensions in the Middle East, a development that typically supports gold prices, the market has taken an unexpected turn. After months of climbing steadily, gold prices have shown signs of weakness — raising a key question among investors: is the bull run nearing its end?

Everything shifted in mid-June. On June 13, Israel launched airstrikes targeting Iran’s nuclear facilities and military infrastructure. Iran quickly retaliated, and tensions between the two countries spiked. As expected, markets reacted swiftly. Gold — a traditional safe-haven asset — surged past $3,450 an ounce, hitting a two-month high. Oil prices climbed as well, as fears mounted that any further escalation in the region could disrupt energy supplies and intensify global inflationary pressures.

But the rally didn’t last. By June 16, gold had pulled back, closing around $3,416 per ounce — a nearly 0.5% drop on the day. While the dip wasn’t major, the fact that gold couldn’t hold its gains even amid heightened geopolitical risk left many wondering if bullish momentum was fading. From its record high of $3,466 in April, gold is still about $50 down.

To understand what’s happening with gold, one needs to look beyond geopolitics.

Gold has had a massive run this year. Prices are already up over 30% in 2024, and 2025 has added another 30% so far, with gold briefly pushing past $3,500 per ounce. This rally has been fueled not just by fears of conflict, but also by robust buying from global central banks — especially in China and Russia — a weaker U.S. dollar, and ongoing speculation about interest rate cuts by the Federal Reserve.

Ironically, expectations of rate cuts and a softening dollar — both traditionally bullish for gold — have recently become headwinds. That’s partly because some investors worry that a slowdown in the economy, or excessive bullish positioning in gold, could trigger profit-taking or a broader technical correction. And with oil prices creeping higher, inflation may persist longer than expected. This complicates gold’s role as an inflation hedge — some now wonder if that narrative has already been priced in.

From a technical perspective, the $3,400 level is a key short-term support. If gold holds that, the bullish trend might still continue. But if prices slip below it, we could see a deeper pullback toward the $3,350 range — or even lower.

Looking ahead, gold may continue to trade sideways at elevated levels. With so many variables still in play — from the Middle East conflict, to the Fed’s next move, to central bank gold buying (especially in Asia) — the outlook remains uncertain.

For everyday investors, a cautious approach is advised. Allocating 5% to 10% of your portfolio to gold-related assets, such as Gold ETFs or physical bullion, may be a good hedge against volatility. Pairing that with more stable defensive assets, like long-term U.S. Treasuries, can help manage risk in case the markets get turbulent.

In short, while gold has pulled back slightly, its value as a hedge hasn’t faded. In today’s uncertain global landscape, gold remains an essential component of a well-balanced portfolio. Smart investors will keep an eye on the broader macro picture and stay agile in adjusting their strategies as conditions evolve.