Gold prices plunged more than 8% on Monday, falling to their lowest level of 2026 after just recording their worst weekly performance in roughly 43 years. The main driver was the escalating conflict in the Middle East, which has fueled inflation concerns and reinforced expectations that global interest rates will remain elevated for longer.

Spot gold dropped as much as 8.8% to below USD 4,100 per ounce at 09:22 GMT, the lowest level since December 11, while extending its losing streak to a ninth consecutive session.

Last week, the precious metal lost more than 10% in value its steepest weekly decline since February 1983 and it is now down more than 20% from its all-time high of USD 5,598 per ounce, set on January 29. This price action suggests that selling pressure is currently dominating the market.

Inflation pressures are outweighing gold’s appeal

As the Iran conflict enters its fourth week and oil prices remain around USD 100 per barrel, market expectations have shifted clearly from the possibility of rate cuts to a scenario of higher-for-longer interest rates, or even further hikes. This has directly weakened gold’s appeal from a yield perspective.

Tensions escalated further after Iran warned that it could target the energy systems and water supplies of Gulf countries if the United States were to launch military actions against its infrastructure. In addition, the risk of supply disruptions stemming from a potential closure of the Strait of Hormuz continues to keep oil prices elevated, thereby intensifying inflationary pressure through higher transportation and production costs.

Rising inflation leaves central banks with limited room to ease monetary policy. In that environment, gold a non-yielding asset continues to face significant pressure.

Technical analysis: The downtrend continues to expand

From a technical perspective, gold’s persistent sharp declines with wide daily ranges are characteristic of an impulsive bearish wave. Markets often rise amid skepticism, but they tend to fall in panic and that psychological factor is now amplifying the current sell-off.

However, price has now reached the lower boundary of the ABC parallel channel an important technical zone that deserves close attention. This could become the area that triggers a short-term rebound. Therefore, price action and market structure at this level should be monitored carefully to assess whether the market is forming a temporary bottom.

In terms of wave structure, gold is still moving within the decline from Gold B to Gold C, with an internal five-wave structure of l1 – t1 – l2 – t2 – l3 white Million Dollar Model No. 2. This suggests that the primary trend remains bearish, and any rebounds that may occur are likely to be technical in nature only.

Conclusion

Although gold has reached an important technical support zone and may see a short-term rebound, the main trend still shows no clear sign of reversal. Pressure from the high-interest-rate environment and persistent inflation continues to dominate the market.

In the short term, close attention should be paid to price reaction around the lower boundary of the channel. If buying pressure is not strong enough to create a clear bullish structure, the likelihood of the market extending its decline within the Wave C structure remains the higher-probability scenario.

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