Gold flat for 8 months, down 20% from peak: Is the bull run finally losing steam?

After scaling a high of $5,602 per ounce in late January this year, gold now trades around $4,500, levels last seen in December 2025. From the peak, gold is still down nearly 20%, but some ‘green shoots’ seem to be emerging. Gold is up over 10% from the July-end lows.

So, what’s supporting gold? Right now, the gold market is influenced by multiple factors, including rising geopolitical tensions that drive demand for portfolio protection, and softer inflation components that keep discussions of future rate cuts alive.

“Gold’s consolidation near $4,500 reflects a tug-of-war between structurally supportive demand and persistent macroeconomic headwinds,” says Kaynat Chainwala, AVP, Commodity Research, Kotak Securities.

Indian gold investors had a softer landing

Comparatively, gold investors in India had a safer landing. Gold price in India made an all-time high of Rs 1,76,306 per ten grams 24 carat on January 29, and currently trades 10% lower at around Rs 1,59,115, not the 20% hard landing seen by international gold investors.

In fact, even Indian investors who bought gold in December 2025 are sitting on a 20% gain, while international investors have seen no returns. But it has also got to do with the 9% import duty hike and the depreciation of the Indian rupee against the dollar.

Internationally, gold is experiencing headwinds but is finding enough support to consolidate around $4,500. Let us look at each of them.

Iran tension keeps oil and inflation on edge

The US-Iran tension continues, with oil supply getting restricted in the Strait of Hormuz. That’s enough for oil to inch towards the $100 mark, currently above $93, nearly 30% higher than the pre-war price.

Eventually, the global financial markets, including the gold market, are facing the heat. The reason: oil price increases are driving inflation, restricting the US Fed’s ability to lower interest rates without potentially reigniting price inflation.

And, if the US Fed doesn’t cut rates, dollar-denominated assets remain the first choice for investors over a non-yielding asset like gold.

Will the Fed cut rates, or hike them?

In early 2026, there was an expectation of at least three rate cuts. That shifted to a potential rate hike in September due to persistent inflation in the US, following the onset of a Middle East war. But after weak job market data in July, these expectations have cooled down, or been pushed forward to the October and December FOMC meetings. Expectations for gold to break out should remain low unless there is clarity on the direction of interest rates. Sticky inflation could even make the US Fed choose to keep rates unchanged in 2026.

A 5.33% bond yield forced the Treasury’s hand

A boost for gold investors came this week with the announcement of US Treasury liquidity measures, which included doubling the buyback of securities.

The Treasury announced plans to double the size of buybacks for long-dated securities. Here’s why the US Treasury had to intervene: the 30-year US Treasury bond yield recently shot up to a multi-decade high of 5.33%, last seen in 2002 and 2007.

But what have yields got to do with gold prices? Rising yields indicate potential increases in interest rates, negatively impacting the economy, businesses, and borrowers, while simultaneously increasing the US debt burden. The US has already paid over $1 trillion in servicing its debt so far this year. Following the Treasury intervention, liquidity increased, lowering the cost of money and leading to a 4% jump in gold prices due to expectations of reduced interest rates.

What’s still keeping gold afloat

Despite the headwinds, gold is currently finding support from three major factors: ongoing geopolitical tensions, particularly with Trump’s threats towards Iran and its supporters; central banks increasingly purchasing gold; and rising expectations of significant inflation in the months ahead.

Gold is traditionally viewed as a haven asset and the most effective hedge against inflation. It appears to be working towards meeting that objective. Another factor supporting gold is the US fiscal position. The US fiscal debt continues to rise, and the interest burden is also on the rise.

The Treasury intervention aims to precisely do this: lower the yields. However, as of August 21, bond yields have once more increased, as markets perceive these interventions as temporary rather than a sustainable solution for managing yields.

Eyes on Jackson Hole

Despite the headwinds, gold may show some mettle in the long term ahead, with intermittent dips as well. “Safe-haven demand, central-bank purchases and ETF inflows are providing a firm floor. The market’s ability to absorb elevated yields without a deeper correction suggests that the broader bullish structure remains intact, although near-term price action is likely to stay volatile and range-bound,” says Chainwala.

Markets expect gold to remain range-bound for a few days more, until Kevin Warsh speaks at the Jackson Hole Economic Policy Symposium in late August, providing further cues on the direction of rates.

Bottomline

Gold’s zero return over 8 months tells only half the story. The metal is still caught between two forces pulling in opposite directions: geopolitical risk, central bank buying and US fiscal worries pushing prices up, against elevated bond yields and a cautious Fed capping the upside.

Until there’s more clarity on rate cuts and how the Iran situation plays out, gold looks set to stay rangebound, with Jackson Hole in late August as the next big trigger to watch.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Gold prices are subject to market risk and can be volatile. The views and recommendations quoted above are those of individual analysts or commentators and not of this publication. Readers are advised to consult a certified financial advisor before making any investment decisions.