Why Has Gold Stopped Climbing?

Last week, we wrote about how that despite a chaotic start to 2026, where months of conflicts and geopolitical uncertainty looked set to continue with war breaking out across the Middle East, both gold and silver are seemingly in a holding pattern. After months of record highs and sharp pullbacks, both metals have consolidated and have showed no sign of reacting sharply to the ongoing conflict. That trend has continued into this week, with gold down c3% and silver down c8% from the week prior.

On the surface, the current backdrop should be supportive. There’s an ongoing conflict involving Iran, elevated geopolitical tension, and continued uncertainty across global markets. All of which are traditionally a recipe for higher gold and silver prices. But like we covered last week, instead of pushing prices higher the conflict has indirectly strengthened the US dollar. With gold priced in dollars, bullion becomes more expensive when the dollar rises for overseas buyers, whilst a stronger greenback also sees investors looking at allocating funds into yielding assets backed by the currency.

At the same time, rising oil prices are feeding inflation concerns. Again, normally that might help gold, but it comes with a catch: higher inflation reduces the likelihood of interest rate cuts, which helps strengthen the dollar further.

And that brings us to the next pressure point.

Expectations around interest rates have shifted. Some analysts are now expecting just one rate cut in 2026, pushed toward the latter part of the year. That’s a notable change from earlier optimism around looser monetary policy which helped feed some of the precious metal price rises we saw earlier in the year. For gold, this creates a headwind - it doesn’t generate income, so when interest rates stay higher for longer, other yield-bearing assets start to look more attractive by comparison. Add in a stronger dollar and persistent inflation concerns, and you have a combination that explains why prices have cooled, even in the middle of geopolitical tension. All eyes will be on the next FOMC meeting Wednesday, where we may get some indication on short to medium term outlook with regards to rate cuts.

There’s also another, less discussed factor at play: liquidity. Gold is often described as a safe haven, but it’s also a highly liquid asset. So, in periods of market stress, that can work both ways with some investors selling gold and silver not because they’ve lost faith in the metals, but because they need liquidity elsewhere - whether to cover losses, rebalance portfolios, or simply hold cash in uncertain conditions.

Not according to most analysts. Despite the recent plateau, the broader view remains constructive. UBS, for example, continues to point toward $5,900–$6,200 gold as a potential range this year, driven by underlying factors that haven’t gone anywhere.

Those include:

In short, the foundations remain intact, all that's changed is the short-term environment around them. If anything, what we’re seeing now looks less like an ending and more like a reset. After a strong run, some of the excess has been taken out of the market, which means gold is no longer overbought, whilst silver, after a sharper correction, is beginning to find its footing. Historically, this kind of behaviour isn’t unusual. Prices often spike during the early stages of conflict, only to cool as markets adjust to the reality before longer-term drivers take over again.

All of this leaves us with a familiar decision to make. With prices off their recent highs but the long-term case still intact, some investors will see opportunity. Others will prefer to wait for clearer signals, particularly around interest rates and the direction of the US economy - both approaches have their logic.

But as ever with precious metals, timing the perfect moment is easier in hindsight. The bigger picture tends to matter more than the perfect entry point.

Gold and silver haven’t lost their role, they’ve just taken a breather. A stronger dollar, shifting rate expectations, and the need for liquidity have kept prices in check for now. But the underlying drivers, from central bank demand to structural economic concerns, remain firmly in place.

For now, the market is pausing, but what happens next will likely depend less on headlines, and more on what central banks, and the data, do next.

And in markets like these, that’s usually where things get interesting again.