Gold Remains Under Pressure Despite Signals of Peace with Iran!

Global gold prices remained under pressure during Wednesday’s trading session (October 21, 2026), amid uncertainty surrounding the conflict between the United States and Iran—a situation that has made the trajectory of inflation and the Federal Reserve’s (The Fed) interest rate policy increasingly difficult to predict. Spot gold fell 0.2% to US$4,118.83 per troy ounce as of 08:08 Singapore time. Investors remain cautious due to conflicting signals regarding the possibility of peace in the Middle East, while high energy prices continue to cast a shadow over the global economic outlook.

Since the conflict between the United States and Iran erupted in late February, gold has lost approximately 20% of its value. This decline has occurred as the war drives up energy costs and intensifies concerns regarding inflation in the United States. Although gold is traditionally viewed as a safe-haven asset during periods of heightened geopolitical tension, high inflation could prompt the Federal Reserve to maintain or even raise interest rates. Such a policy poses a challenge for gold, as investors may favor yield-bearing bonds over a precious metal that generates no interest.

Meanwhile, the U.S. bond market has begun to shift following a decline in oil prices and signs of weakening across several economic indicators. Recent data shows a drop in new home construction in the U.S. for September, while pending home sales have fallen to their lowest level on record. These developments have fueled concerns about an economic slowdown, driving demand for long-term U.S. government bonds. Should bond yields continue to soften, the pressure on gold prices could potentially ease.

Nevertheless, uncertainty surrounding the Federal Reserve’s policy remains a primary concern for investors ahead of the upcoming meeting on October 27–28. Federal Reserve official Kevin Warsh did not provide a definitive indication regarding interest rate decisions; however, the market estimates the probability of a 25-basis-point hike in October at less than 17%. Nevertheless, the likelihood of a rate increase at a subsequent meeting before the end of the year remains around 85%, given that U.S. inflation continues to hold well above the 2% target. This divergence in expectations leaves the price of gold vulnerable to shifts in market sentiment.

Looking ahead, the trajectory of gold prices will depend heavily on developments in Iranian diplomacy, oil price movements, and the state of the U.S. economy. From a technical perspective, the US$4,100 level serves as a psychological support to watch, while US$4,150 acts as an initial resistance should the price attempt to recover. If geopolitical tensions ease and oil prices decline, inflationary concerns may subside, potentially supporting a recovery in gold. Conversely, if inflationary pressures remain high and the Federal Reserve signals further rate hikes, gold risks extending its decline. The key question now is whether the US$4,100 level will serve as a turning point for gold prices or merely as a threshold before a deeper correction.