Caution! Gold Price Plummets 2% to US$4,500 Level, Forecast to Fall Even Further

Jakarta, CNBC Indonesia - Gold prices plummeted 2% on Monday amid rising tensions between the United States (US) and Iran, which drove a strengthening of the US dollar and bolstered inflation concerns, thereby maintaining high interest rate expectations. According to Refinitiv, gold prices closed at US$4,520.40 per troy ounce on Monday (4/5/2026). The price dropped 2.02%. Over the past two days, gold prices have consistently weakened, falling 2.2%. Yesterday’s closing price marked the lowest level since 30 March 2026, or more than a month ago. Gold prices have not improved today. On Tuesday (5/5/2026) at 06:36 WIB, gold prices stood at US$4,519.30 per troy ounce, flat at a 0.02% decline. “The latest news clearly does not provide confidence that the situation will be fine, and it has reignited inflation concerns, accompanied by fairly hawkish signals on interest rate policy to the market,” said Bart Melek, Global Head of Commodity Strategy at TD Securities, quoted from Refinitiv. Iran attacked several ships in the Strait of Hormuz and set fire to an oil port in the United Arab Emirates, following President Donald Trump’s attempt to use the US Navy to open shipping lanes, which instead triggered the largest escalation since the ceasefire four weeks ago. The US dollar strengthened, and Brent oil prices surged more than 5%. The dollar’s appreciation makes gold, priced in dollars, more expensive for holders of other currencies. On the other hand, the surge in energy prices amplifies inflation concerns, thereby reinforcing speculation that central banks will maintain high interest rates for longer. Barclays is one of several institutions forecasting no policy easing from the Federal Reserve this year. Last week, the Fed maintained interest rates in its most divided decision since 1992, amid growing concerns over the impact of energy prices on the economy. Key data to be released this week includes US job vacancies, the ADP employment report, and the April payrolls report. Although gold serves as a hedge against inflation and geopolitical uncertainty, its attractiveness diminishes in a high-interest-rate environment because it offers no yield. “I see strong support levels around US$4,200 for gold. However, uncertainty and potential rate hikes could push some traders out of positions in the short term,” Melek added.