Gold experienced a “tug-of-war” in the first half of April, with prices dropping after hitting overbought levels, buoyed by “safe haven” investor buying linked to the Iran war.
Recent trading data shows gold at around USD $4,773–$4,800 per ounce, having pulled back from higher levels but remaining significantly higher than a year ago (roughly 40-43 percent year-over-year gains).
The gold market has been heavily influenced by the conflict in the Middle East.
Spikes were caused by “safe haven” investor buying, but bullion prices retreated as the United States and Iran engaged in talks to establish a ceasefire, easing oil price-driven inflation fears and reducing haven buying.
Financial services group StoneX has reported that recent downward movements were partly due to “forced cash generation” where investors sold gold to raise liquidity during broader market stress, rather than a loss of confidence in gold as a safe haven.
While central banks remain, in the long term, bullish on gold, the massive pace of purchases has shown signs of slowing at higher price levels, according to the World Gold Council.
Despite the short-term pullback, many analysts maintain a bullish outlook for the remainder of 2026, with some projections forecasting prices to reach $5,000–$6,000 per ounce by the end of the year, driven by investor and physical demand and ongoing macroeconomic uncertainty.
Fears of inflation, linked to high oil prices, could lead the U.S. Federal Reserve (central bank) to hold interest rates steady for longer, rather than cutting rates, potentially keeping a lid on gold prices.
A climate of higher U.S. interest rates tends to be a bearish indicator for gold, as bullion bears no yield and thus struggles to compete with alternative assets.
As of mid-April, the pound had steadied around $1.356 but faced ongoing pressure as economic risks from the Iran war, including rising energy costs and slashed growth forecasts from the International Monetary Fund (IMF), took hold.
Analysts warn that domestic economic weaknesses and potential Bank of England interest rate hikes could create further uncertainty over the exchange rate outlook.
The energy shock from the Iran war will hit the UK the hardest of the world's advanced economies, the IMF has forecast.
In its latest World Economic Outlook, the IMF cut its estimate for UK growth this year to 0.8%, from the 1.3% prediction made in January before hostilities began.
