Gold Pulls Back as Oil Surge and Strong Dollar Pressure Precious Metals

Precious metals experienced a volatile week as escalating geopolitical tensions in the Middle East collided with a strengthening US dollar and rising oil prices. Gold briefly surged earlier in the conflict as investors rushed into safe-haven assets, but prices pulled back as macroeconomic pressures intensified. Bullion dropped as much as 3% during the week to near $5,015 per ounce before recovering slightly to trade around $5,120, marking its first weekly decline in over a month. 

The primary driver behind the pullback was a sharp rally in crude oil, with Brent prices briefly approaching $120 per barrel amid disruptions in the Persian Gulf and the continued closure of shipping through the Strait of Hormuz. Rising energy costs have renewed fears that inflation could remain elevated, potentially forcing the Federal Reserve to keep interest rates higher for longer. Higher borrowing costs and a firmer US dollar — which gained roughly 0.4% in early trading — typically weigh on non-yielding assets like gold. 

Despite the short-term weakness, gold remains one of the strongest-performing assets of 2026, still up roughly 18% year-to-date. Strong central bank demand, continued geopolitical instability, and ongoing concerns surrounding global trade policy have supported the broader rally throughout the year. China’s central bank continued to add to its reserves, reinforcing the structural demand underpinning the market. 

Silver followed gold lower during the week, falling around 1.6% to near $83 per ounce, while platinum and palladium also declined amid the stronger dollar and broader pressure across commodities. 

Looking ahead, market direction will largely depend on the trajectory of the Middle East conflict and expectations for US monetary policy, with volatility likely to persist in the near term.