Gold: “And every day...”

The Iran-U.S. crisis is driving oil prices and bond yields even higher—with noticeable consequences for gold. Michael Blumenroth sees market dynamics and shifting interest rate expectations as a drag.

May 21, 2026. FRANKFURT (Xetra-Gold). Groundhog Day… the older among us will still remember the 1993 film: Bill Murray plays the egocentric and sarcastic weatherman Phil Connors, who is stuck in a time loop and relives the same day over and over again. We market observers feel much the same way when we look at the news surrounding the situation in the Middle East and the closure of the Strait of Hormuz. Time and again, especially through social media posts by U.S. President Donald Trump, we are led to believe that an agreement with Iran is imminent, and yet the deadlocked situation has now been dragging on for weeks.

Oil Price Surge Due to Geopolitical Tensions

This led to a sharp rise in oil prices, particularly at the end of last week and the beginning of this week; Brent crude briefly traded at over $110 per barrel, while WTI exceeded $106 per barrel. As prices for oil for delivery in late 2026 and early 2027 continued to rise, bond markets in particular reacted noticeably: yields on long-term U.S. and U.K. government bonds jumped to their highest levels since 2007, while those on German government bonds reached their highest levels since 2011. The reason for this is the inflationary impact of higher oil prices. On Tuesday, the futures markets were now fully pricing in a key interest rate hike by the U.S. Federal Reserve by March 2027, after two to three rate cuts had been priced in as recently as early February. The U.S. dollar also benefited from the rise in U.S. yields, appreciating broadly against nearly every other currency.

Gold Prices Under Pressure from Rising Yields

Here, too, we see a repeat of the pattern mentioned above: Rising yields and a stronger U.S. dollar typically weigh on gold prices, since gold does not guarantee a fixed return. Just yesterday, the situation eased somewhat after news agencies reported that three oil tankers had been allowed to pass through the Strait of Hormuz. Nevertheless, gold has declined compared to last Wednesday.

Gold Price Trends Over the Course of the Week

While gold prices were trading at around $4,712 per ounce on Wednesday morning last week, they had already headed south toward $4,540 by the end of the week on Friday. Following a brief, slight recovery on Tuesday, the week’s low so far was reached yesterday, Wednesday, at around $4,455 per ounce. After oil prices and yields fell moderately yesterday, gold prices climbed to 4,570 overnight. As of this writing, the yellow metal is trading slightly lower again at $4,530 per ounce.

Xetra Gold: Price Decline Despite a Weaker Euro

The Xetra Gold price thus also fell, somewhat tempered by the euro’s weaker exchange rate against the U.S. dollar: During regular trading hours, the price fell sharply from €129.00 per gram last Wednesday morning and €129.50 on Thursday to €125.70 by the end of the week on Friday. Here, too, a weekly low of €123.75 was recorded on Tuesday. At the start of trading today, the price is expected to be around €125.25 per gram.

Outlook: De-escalation in the Middle East remains crucial

Back to Groundhog Day: The main focus in the markets remains on whether and when a sustainable de-escalation in the Middle East can be agreed upon. Since Monday marks various holidays in the U.S., the U.K., and Germany, there could still be some position adjustments ahead of tomorrow, Friday, before the long weekend.  

I wish all readers a sunny and warm Pentecost weekend, and to my like-minded friends who love loud music, two memorable Metallica concerts at the beautiful Frankfurt stadium.