Gold Price Suffers Devastating Collapse as Rate Hikes Bite

The recent gold price slump has been mirrored by events in the 1980s. In both periods, an Iranian crisis triggered an oil shock, which fed into inflation readings and forced central banks to adopt a more restrictive posture.

In January 2026, gold reached an all-time high of $5,589 per ounce before plummeting as the U.S.-Iran war began. The widespread expectation was that gold would extend its gains further, but instead it spiked briefly on the headlines and then reversed as the oil shock from the conflict itself fed into inflation readings.

The Federal Reserve's response to the crisis was a more restrictive posture, eliminating rate cuts that gold required to sustain its rally. The sell-off accelerated precisely when the Middle East conflict entered its most dangerous phase.