Gold prices slipped toward $4,700 per ounce on Monday as the escalating Strait of Hormuz crisis paradoxically weighed on the precious metal, with surging inflation expectations dampening hopes for Federal Reserve rate cuts this year.
Gold Defies Safe-Haven Expectations
Spot gold traded at approximately $4,761 per ounce on April 14, 2026, marking a modest 0.33% gain from the previous session but remaining well below recent highs. The yellow metal has fallen over 10% since the US-Iran conflict began in late February, defying its traditional role as a safe-haven asset during geopolitical turmoil.
The counterintuitive decline comes as investors grapple with the inflationary implications of the ongoing energy crisis. With the Strait of Hormuz effectively shut down, oil prices have surged past $100 per barrel, pushing US inflation to 3.3% — the highest reading since May 2024.
Failed Diplomacy Triggers Blockade
The latest pressure on gold followed Vice President JD Vance's announcement on April 12 that weekend talks between US and Iranian officials in Pakistan had collapsed. President Trump subsequently declared a naval blockade of the critical shipping route, announcing the US Navy would intercept vessels that had paid tolls to Iran.
The failed negotiations reportedly broke down over Iran's demands for control of the strait, war reparations, a regional ceasefire, and access to frozen overseas assets. The US accused Tehran of refusing to curb its nuclear ambitions.
Abu Dhabi National Oil Company CEO Sultan Al Jaber noted that 230 loaded oil tankers remain trapped inside the Persian Gulf, waiting for safe passage.
Inflation Fears Outweigh Safe-Haven Demand
Standard Chartered analyst Steve Brice attributed gold's weakness partly to emerging-market central banks selling bullion to stabilize their currencies amid the dollar's strength. The greenback has rallied as investors seek safety, making gold more expensive for overseas buyers.
The prospect of persistently elevated oil prices has led traders to scale back bets on Fed rate cuts in 2026. According to the CME FedWatch tool, markets now see just a 27% probability of a 25 basis point rate cut in December. Higher interest rates typically pressure non-yielding assets like gold.
The latest US CPI report revealed monthly inflation surging 0.9% — the steepest rise since mid-2022 — further cementing expectations that central banks may delay rate cuts or even tighten policy.
Other Precious Metals Mixed
Silver traded near $74 per ounce, while platinum held at $2,028 and palladium at $1,531. The broader precious metals complex has struggled amid the conflicting signals of geopolitical risk and inflation-driven monetary policy concerns.
Outlook Remains Bullish Long-Term
Despite near-term headwinds, analyst forecasts for 2026 remain broadly bullish on gold, with price targets ranging from $4,000 to $5,000 and more optimistic projections reaching $5,000 to $6,300 by year-end.
Gold has still gained approximately 47% over the past year, driven by persistent inflation concerns and economic uncertainty. Over the past month, however, prices have retreated nearly 5% from recent peaks.
President Trump offered a potential lifeline late Monday, suggesting Iranian officials had approached his administration "with the desire to work a deal," raising hopes that diplomatic efforts could resume.
Sources: Fortune, Bloomberg, FX Leaders, CNBC