By TradingView
Published: May 20, 2026 - 8:49 PM
Updated: May 20, 2026 - 8:52 PM
The gold rush that started late last year looks exhausted. Since the U.S. operation in Iran, the precious metal has lost around 15% and continues to slide amid fears of another inflation wave driven by disruptions in the Strait of Hormuz.
Although gold is traditionally seen as a safe-haven asset during times of uncertainty, if central banks resume tightening monetary policy, investors are likely to turn to more attractive alternatives, such as deposits and newly issued bonds. Gold pays neither dividends nor coupons, and a stronger dollar only adds further pressure. In that sense, it’s logical to assume that once tensions in the Middle East start to ease, XAUUSD could eventually regain momentum.
Speaking of tighter Fed policy, inflation continues to disappoint, with the PPI rising in April 1.4% month-over-month and 6.0% year-over-year, well above analyst expectations of 0.5% and 4.9%, respectively. No wonder the CME FedWatch tool shows the market sees roughly a 40% chance of a rate hike by the first quarter of next year, while rate cuts are not expected at least until October 2027.
For the same reason, global bond markets also came under pressure: yields on 30-year U.S. Treasury bonds climbed close to levels last seen in 2007, while Germany’s 10-year Bund yield approached 3.2%, its highest since May 2011.
But isn’t the US itself one of the world’s largest oil producers? Shouldn’t higher energy prices actually help the American economy?
For U.S. oil companies, absolutely. For ordinary Americans, not so much.
The U.S. has been increasing withdrawals from its Strategic Petroleum Reserve, pushing stockpiles back toward July 2024 levels. The lower those reserves fall, the higher fuel prices may rise for consumers. To avoid further pressure on the president’s approval rating, the White House would clearly prefer the Middle East conflict to end sooner rather than later.
The resilience of the S&P 500 suggests investors are confident that even if the war does not fully end, we could see a major “TACO,” for example, by announcing a win over Iran while leaving the situation in the Strait of Hormuz largely unchanged.
To sum up, for gold to regain bullish momentum, inflation risks must first ease. And for that to happen, geopolitical tensions should ease, and given how quickly accessible oil reserves are being depleted, the market is effectively betting that a resolution is around the corner.
Source：https://www.kitco.com/opinion/2026-05-20/when-can-we-expect-gold-rally-return
