Gold Prices Plunge Again as New "Phantom" Emerges, Sparking Concern
Gold prices came under pressure as hopes of reaching a peace agreement with Iran faded, pushing oil prices higher. This situation has heightened concerns about inflation and the potential for persistently high global interest rates.
According to Refinitiv, gold prices closed at US$4,713.65 per troy ounce on Tuesday’s trading (12/5/2026), down 0.43%. This decline ended a two-day positive streak in which gold had risen 1.2%.
Gold prices edged up slightly on Wednesday (13/5/2026), reaching US$4,720.12, up 0.14%.
US President Donald Trump stated that the ceasefire was in a “near collapse” condition after Tehran rejected Washington’s proposal to end the conflict.
Following the statement, oil prices surged again. On Tuesday’s trading (12/5/2026), West Texas Intermediate crude oil futures jumped 4.19% to close at US$102.18 per barrel. Brent Crude rose 3.42% to US$107.77 per barrel.
This increase also impacted a spike in the US dollar index. The dollar index closed at 98.298 in yesterday’s trading, up from 97.955 in the previous session.
Gold purchases are denominated in US dollars, so a stronger dollar burdens gold buyers.
Bart Melek, Global Head of Commodity Strategy at TD Securities, explained that the emergence of stagflation risks poses a new threat to gold. This condition could make it difficult for interest rates to fall.
“The rise in oil prices increases the risk that the Federal Reserve and other central banks may have to raise interest rates to combat potentially emerging stagflation. That’s what the gold market is responding to,” said Bart Melek, Global Head of Commodity Strategy at TD Securities, quoted from Refinitiv.
Meanwhile, the latest data shows that US consumer inflation rose for the second consecutive month in April, resulting in the largest annual increase in nearly three years. This strengthens expectations that the Federal Reserve will maintain high interest rates for longer.
The Consumer Price Index (CPI) rose 0.6% monthly and 3.8% annually, slightly above market expectations. Meanwhile, core inflation, excluding food and energy, increased 0.4% monthly and 2.8% annually, still well above the Federal Reserve’s 2% target.
The annual inflation rate breaching 3.8% is the highest since May 2023.
Although gold is known as an inflation hedge, rising interest rates typically pressure the precious metal because gold offers no yield.
Joni Teves, precious metals strategist at UBS Investment Bank, said his firm remains optimistic about gold’s prospects due to strong supporting fundamental factors.
“We still believe gold prices can recover from current levels and hit new record highs this year,” he said.
Market participants are now awaiting the release of Producer Price Index (PPI) data on Wednesday, as well as the meeting between Trump and Chinese President Xi Jinping in Beijing, scheduled for Thursday to Friday.
Elsewhere, banks in India have resumed importing gold and silver after a halt of more than a month, following the approval of a 3% import duty payment.