Gold has staged a strong comeback this week, extending a three-day rally as investors increasingly bet that the war in the Middle East may be approaching its final phase. That shift in sentiment has eased some of the market’s immediate inflation fears and redirected attention toward a more familiar bullish driver for bullion: the risk of slower growth and eventual interest-rate cuts. Spot gold climbed as much as 2% to top $4,700 an ounce, after surging 3.5% in the previous session. Prices briefly pushed toward the $4,760-$4,800 range, with US gold futures also strengthening, before momentum cooled as traders weighed conflicting headlines from Washington and Tehran.
The recent rebound marks a notable turnaround for bullion after a brutal March, when gold fell nearly 12%, its worst monthly performance since October 2008. Even with this week’s gains, gold remains below its pre-war levels and is still some distance from its January record high near $5,600 an ounce.
The gold market is being pulled in two directions by developments in the Middle East. On one hand, comments from US President Donald Trump suggesting the conflict could end within two to three weeks have encouraged hopes of de-escalation. On the other hand, his rhetoric has remained forceful, with Trump saying he would only consider halting attacks on Iran once the Strait of Hormuz is reopened, and warning that Iran could face even heavier strikes in the near term. That mixed messaging has kept volatility elevated across asset classes. At times, hopes for a quicker end to the conflict have pushed the US dollar and Treasury yields lower, supporting gold. Equities have also recovered on days when traders sensed the war might wind down. But when Trump’s statements have sounded more like a military escalation than a ceasefire plan, gold has quickly lost ground, while oil and the dollar have surged.
After Trump’s latest address to the nation, spot gold at one stage dropped as much as 4.3%, snapping a four-day winning streak. Investors interpreted the speech less as a roadmap to peace and more as a signal that the US-Israel campaign against Iran would intensify before any settlement could be reached. Silver also fell sharply, while oil jumped on renewed fears over energy flows through the Strait of Hormuz.
The key shift for gold is not simply geopolitics, but how the war is shaping expectations for central banks. For most of the conflict, rising oil prices and supply disruptions, especially linked to the closure of the Strait of Hormuz, a transit route for roughly a fifth of global oil and liquefied natural gas, fed concerns that central banks might need to keep policy tighter for longer, or even raise rates, to combat inflation. That dynamic hurt gold because higher rates increase the opportunity cost of holding a non-yielding asset.
Now, however, traders are beginning to focus more on the possibility that the war’s economic damage could outweigh its inflationary impact. Federal Reserve Chair Jerome Powell said earlier this week that longer-term inflation expectations remain anchored, helping calm fears that the Fed would need to respond aggressively to conflict-driven price pressures. In turn, bond traders have reduced bets on additional rate hikes and revived the view that policymakers may ultimately need to support a weakening economy instead.“Gold’s safe-haven appeal tends to re-emerge when the narrative shifts from inflation to growth risk,” said Yuxuan Tang, Asia head of rates and FX strategy at JPMorgan Private Bank. She added that the Fed has “limited bandwidth” to raise rates this cycle and is more likely to focus on a strained labor market. That outlook is supportive for gold, which typically benefits when borrowing costs are expected to fall.
Gold’s performance during the conflict has also reflected a broader pattern seen across markets: in acute periods of stress, investors have sometimes sold bullion not because they no longer view it as a haven, but because they need liquidity to cover losses elsewhere. That dynamic has repeatedly dulled gold’s traditional haven appeal. When equities sold off sharply and the dollar strengthened, investors often sold gold alongside other assets. Meanwhile, spikes in oil prices have reinforced expectations of supply chain disruptions and inflation, creating another obstacle for bullion.
This tension remains visible. Oil has pushed back above $100 a barrel at times, while the US dollar has remained firm on fears of prolonged disruption to global trade and energy flows. Analysts say this leaves gold stuck in a tug-of-war between short-term inflation and higher-rate fears on one side, and longer-term recession and rate-cut expectations on the other.
So far, gold has struggled to sustain a break above $4,800 an ounce, with that level emerging as a near-term ceiling. Analysts say the market is still searching for direction as each new geopolitical headline reshapes the outlook. Bob Haberkorn, senior market strategist at RJO Futures, said gold could move back above $5,000 an ounce if de-escalation becomes more likely and rate-cut expectations strengthen. Nick Cawley of Solomon Global also sees $5,000 as the next major level, calling it an important psychological barrier even if not a decisive technical one.
Others are more cautious in the near term. Alex Kuptsikevich, chief market analyst at FxPro, warned that uncertainty over the conflict’s duration and severity is likely to continue to pressure gold. He argued that while markets are currently focused on inflation and tighter policy, the oil shock will ultimately hurt consumers and growth, suggesting that easier monetary policy, not tighter policy, may eventually be needed. Lukman Otunuga of FXTM said $4,600 is the key level to watch on the downside. A sustained break below that could send gold toward $4,450, while firm support there could allow another push toward $4,800. He added that gold could fully regain its haven appeal if a prolonged closure of the Strait of Hormuz were to become a true global growth shock.
Despite the recent volatility, large banks have generally maintained a constructive outlook on gold. Goldman Sachs has kept its year-end forecast at $5,400 an ounce. BNP Paribas expects prices to surpass $6,000 this year, while Wells Fargo has highlighted an upside target of $6,300. The common theme behind those calls is that any credible move toward peace, combined with an eventual pivot by central banks toward supporting growth, could unleash another leg higher for bullion. As David Wilson, director of commodity strategy at BNP Paribas, put it, markets are reacting intensely to headlines even though underlying realities have not changed dramatically. But if a peace deal truly comes into view, he said, gold could rally sharply.
With markets closed for Good Friday, traders are also cautious about carrying large positions into a long weekend that could bring further developments in the Middle East. A report that Iran is drafting a protocol with Oman to monitor traffic through the Strait of Hormuz helped gold trim some losses late in the US session, underscoring how sensitive the market remains to any sign of progress. Beyond geopolitics, attention will soon turn back to US economic data and the Fed. The March nonfarm payrolls report, service-sector and manufacturing data, Fed meeting minutes, the Personal Consumption Expenditures index, and the Consumer Price Index will all be closely watched in the coming days.
For now, gold remains highly headline-driven. But beneath the day-to-day volatility, the bigger shift may already be underway: investors are moving from fearing war-driven inflation to worrying about war-driven economic damage. If that transition continues, bullion’s latest rebound may prove to be more than just a short-covering rally; it could be the start of a renewed push toward the $5,000 mark and beyond.