Gold had one job during a geopolitical crisis: go up. On May 26, it didn’t cooperate.
Spot gold dropped between 0.6% and 0.7%, settling in the range of $4,537 to $4,544 per ounce. The culprit was a familiar one. Escalating US-Iran tensions sent oil prices higher, reigniting inflation fears that made traders recalculate their interest rate expectations. When inflation looks stickier, the “higher-for-longer” rate narrative gains steam, and gold, which pays no yield, suddenly looks less attractive compared to interest-bearing assets.
A split personality in gold markets
The gold market itself couldn’t even agree on a direction. While spot prices slid, US gold futures for June delivery actually rose modestly, gaining between 0.3% and 0.5% during the same trading session. That divergence between spot and futures is worth paying attention to.
Since early 2026, the pattern has repeated. US-Iran tensions flare, oil jumps, inflation expectations tick higher, and gold experiences these counterintuitive dips. Multiple instances of this dynamic have played out over recent months, creating a rhythm that traders are starting to anticipate.
