27.05.202609:56 Forex Analysis & Reviews: Why Has Gold Returned to Decline?

As the chances of reaching a peace agreement decrease, so do the prospects for further growth in gold, which is currently trading just above $4,486 per ounce.

The market picture remains unchanged: hostilities between U.S. and Iranian forces near the Strait of Hormuz continue, despite both sides' claims of diplomatic progress, and officials from the White House indicate that the agreement will require a few more days to finalize.

The paradox of the situation is that stock markets are hitting record highs while gold remains under pressure—and this is not a contradiction but rather the same story told from different angles. Stocks are rising on expectations of de-escalation and AI optimism, while gold is being pressured by the same scenario: a peace agreement means cheaper oil, decreasing inflation, and room for easing monetary policy, which diminishes the main argument in favor of the safe-haven asset. The price asymmetry is currently heavily skewed towards a decline: under any development, there are more reasons for gold to fall than to rise. However, this decline is unlikely to last long, and there will surely be those looking to take advantage of more attractive prices than before.

Since the beginning of the conflict, the metal has lost about 15% and has failed to establish a sustainable recovery. Inflationary risks remain—Bank of Japan Governor Kazuo Ueda warned this week that a sharp rise in oil prices could pose broader inflationary risks to the Japanese economy. Central banks around the world are preparing to tighten rather than ease policy. This exerts pressure on gold through the interest rates channel: the non-yielding metal becomes less attractive amid Treasury yields near multi-year highs.

Silver has lost 0.1% to $76.97. Platinum and palladium have also decreased.

Regarding the current technical picture for gold, buyers need to overcome the nearest resistance at $4,546. This will allow targeting $4,607, above which breaking through will be quite challenging. The farthest target will be the area of $4,656. In the event of a decline in gold, bears will attempt to take control at $4,481. If they succeed, a breakout of the range will deal a significant blow to bullish positions and may push gold down to a low of $4,432, with the prospect of reaching $4,372.