Gold Set for Worst Week in Six Years as War Curbs Rate-Cut Bets

Gold sheets at the Polish mint, also known as Mennica Polska SA, in Warsaw, Poland, on Thursday, Feb. 12, 2026. Poland's central bank, the world's biggest reported buyer of gold, is boosting purchases by another 150 tons as it braces for more of the geopolitical instability that has driven prices to record highs. Photographer: Damian Lemanski/Bloomberg Photo by Damian Lemanski /Bloomberg

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(Bloomberg) — Gold headed for the biggest weekly loss in six years, as war in the Middle East boosted energy and reduced expectations for rate cuts.

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Bullion traded near $4,685 an ounce, down about 7% this week, the most since March 2020. Soaring crude, natural gas and fuel prices triggered by the conflict are raising inflation concerns, reducing prospects of central banks lowering borrowing costs. That hurts gold as it doesn’t pay interest.

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The precious metal — widely viewed as a haven — has dropped every week since the US and Israel attacked Iran last month. The retreat has come as Treasury yields and the US dollar gained ground, investors sold bullion to cover losses elsewhere, and gold-backed exchange-traded funds posted outflows, with global holdings erasing all their additions since the start of the year.

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“Do not buy-the-dip — there’s way too much volatility,” said Robert Gottlieb, a former precious-metals trader at JPMorgan Chase & Co. and now an independent market commentator. “Until the volatility starts to decrease and prices start to consolidate,” there may be more selling, he added. 

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The US Federal Reserve met midweek to assess policy, opting to leaves rates unchanged as widely expected. Chair Jerome Powell emphasized that to resume easing, officials would have to see progress in reducing inflation. 

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Gold’s performance since the Iran war broke out echoes a decline in 2022, when Russia’s invasion of Ukraine caused an energy shock that rippled through global markets. That year, bullion posted a seven-month run of losses through October, the longest such streak on record.

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Bullion-backed ETFs are set for a third week of outflows, with holdings falling more than 60 tons in that period, data compiled by Bloomberg show.

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Despite the recent pullback, gold remains about 8% higher this year. Prices had touched a record just below $5,600 an ounce in late January, supported by a wave of investor enthusiasm, central-bank buying, and concerns over threats to the Fed’s independence posed by US President Donald Trump.

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Dollar strength and initial expectations of slower rate cuts weighed on the metal, even as geopolitical and policy uncertainty indexes spiked, Bloomberg Intelligence analyst Grant Sporre wrote in a note on Friday. “The temporary drop in prices may also boost central bank buying once more,” he wrote. 

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Gold added 0.8% to $4,687.35 an ounce as of 3:30 p.m. in Singapore, after capping a seven-day losing run on Thursday, the longest since October 2023. That drop dragged the metal’s 14-day relative-strength index — a gauge of momentum — to about 35, close to the level that some traders see as overdone.

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“Following the over-sold condition, precious metals may see a brief technical rebound, before resuming their downward trend, provided that there are no immediate solutions to the oil supply shock,” Chinese fund Zhishui Investment Management Co. said in a note. “We continue to recommend riding the momentum with short positions as the primary strategy.”

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In other precious metals, silver fell 1.1% to $72.01 an ounce, down by more than 10% this week. Palladium and platinum were also on track for weekly losses. The Bloomberg Dollar Spot Index edged 0.2% higher. 

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—With assistance from Preeti Soni.

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