On Sunday, following a temporary pause in the US-Iran conflict after 149 days, the U.S. military confirmed that its naval blockade of Iran remained fully operational, while it did not clarify the reasons for the suspension of airstrikes. A senior Trump administration official stated that diplomacy remained the president’s preferred approach, while emphasizing that Iran had experienced the consequences of declining substantive negotiations.
But now the Iran war spread towards the Red Sea and Caspian Sea over the weekend, despite the United States pausing its airstrikes after 13 consecutive nights of attacks, and Iran also refrained from attacking neighbouring countries on Saturday, creating a temporary lull in Gulf fighting.
The whole scenario seems to be twisting on weekends, the same as I explained in my previous gold analysis.
I expressed doubts as weekend developments matter a lot to map the scale of escalation of war between the U.S. and Iran, as recently the Republican-led U.S. House of Representatives backed legislation on Thursday directing President Donald Trump to halt U.S. military action against Iran, the latest symbolic rebuke of the Republican president from Congress.
On Sunday, Trump reportedly stepped back from plans to intensify the campaign amid concerns about widening the conflict, draining U.S. defence stockpiles, alienating Gulf allies and disrupting global energy supplies.
Tensions shifted towards the Red Sea after Iran-aligned Houthi forces attacked Saudi Aramco facilities in Jizan and Yanbu.
Yanbu has become a key export route for Saudi oil, avoiding the Iranian blockade of the Strait of Hormuz. A sustained Houthi campaign could now threaten a second major energy and commercial shipping corridor.
Upon evaluating the movements of on different time frame charts since gold futures tested a record peak at $5,628 an ounce in January this year, while closing this week on July 24 at $4,070.80, despite testing a low at $3,955.16 on June 30, 2026.
Undoubtedly, investors sold down to raise liquidity during the Middle East conflict; came under pressure, while major analysts’ hubs were recommending price targets of $5,700 to $ 6,000 during this period.
Scrutinizing the ninth Central Bank Gold Reserve Survey 2026, which was released on June 16, 2026, provides the latest insights into the central banking community’s strategic views on gold as a reserve asset.
Central banks have accumulated an average of 1,000t of gold over the past four years, up significantly from the 500t average over the preceding decade. This marked acceleration in the pace of accumulation has occurred against a backdrop of geopolitical and economic uncertainty, which has clouded the outlook for reserve managers.
This survey reflects the reasons behind a surge in buying spree by the global central banks rose on quarter-to-quarter basis since quarter 1, 2023, and continued during the all quarters of 2024, before testing a peak in Quarter 1st of 2025, when the US President Donal Trump started to impose trade tariffs on the trading partners of the U.S., coincided with easing interest rate cuts by the US Federal Reserve, to provide boost to gold reserves.
While the Chinese central bank remains at the top of the buyers list in 2025, the buying spree seems to be declining in the first and second quarters of 2026, reflecting a surge in selling pressure as most of the global banks have to adjust the valuation of their respective currencies while the US dollar resumed strength during this period.
Now, I find that the denting impact of the conflict between the US and Iran on the global economy has deepen beyond expectation since Iran has chocked the Strait of Hormuz, while the chocking of second important waterway through red sea due to repeated attacks on oil and other ships by Houthis near Bab el-Mandeb Strait, resulted in sudden surge of oil prices, while the energy-driven inflationary pressure could continue exhaustion in precious metals this year.
Global central banks remain net buyers of gold this year, driven by emerging markets, with total 2026 net demand projected between 680 and 820 tonnes. Key net buyers include Poland, China, Kazakhstan, and Uzbekistan, while isolated selling has come from Russia and Turkey to offset domestic budget pressures.
But I observe that a sustainable move below the key support at $3955 could trigger panic selling by the central banks, as most of them are considering interest rate hikes, which will result in repeated selling of a non-yield asset like gold.
On the other hand, shifting money flow from to other risky assets looks evident enough to keep gold futures under pressure if the US Federal Reserve also comes up with the same rate hike strategy in its meeting on July 27-28, 2026.
Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based solely on observations.
