Global Gold Prices Fall Amid Fading Hopes for US-Iran Peace Deal
JAKARTA, KOMPAS.com - Global gold prices weakened at the close of trading on Tuesday (12/5/2026) local time, or Wednesday (13/5/2026) morning WIB, as rising oil prices sparked inflation concerns and the potential for high interest rates to persist longer.
Quoting Reuters, spot gold fell 1.2 percent to $4,678.49 per ounce.
Meanwhile, US gold futures weakened 0.9 percent to $4,686.70 per ounce.
The rise in oil prices was triggered by fading hopes of reaching a peace agreement between the United States (US) and Iran.
TD Securities analyst Bart Melek said the surge in oil prices increases the risk that global central banks, including the Federal Reserve (The Fed), will maintain or even raise interest rates to curb inflation.
“Higher oil prices increase the risk that the US and other central banks will have to raise interest rates to combat the likely emerging stagflation conditions. Therefore, gold is responding to that pressure,” he said.
Meanwhile, global oil prices themselves surged more than 3 percent in yesterday’s trading, after markets assessed that geopolitical tensions in the Middle East could persist.
On the other hand, the latest data shows that US consumer inflation rose for the second consecutive month in April 2026.
This rise resulted in the largest annual inflation rate in nearly three years and strengthened expectations that The Fed will hold interest rates longer.
Although gold is known as a hedge asset (safe haven) against inflation, rising interest rates typically pressure the price of the precious metal because gold yields no return.
Nevertheless, UBS Investment Bank continues to maintain a positive outlook on gold.
UBS precious metals strategist Joni Teves said the fundamental factors supporting gold prices remain strong.
“We still see gold prices being able to recover from current levels and continue to hit new record highs this year,” Teves said.
Market participants are now awaiting the release of US Producer Price Index (PPI) data this week, as well as the meeting between President Trump and Chinese President Xi Jinping in Beijing, scheduled for Thursday to Friday.