On Monday, 28 September 2026, gold futures traded at about $4,189 an ounce, their lowest level since 5 August, according to Yahoo Finance. That is roughly 25% below the record set in late January. Gold is down more than 8% in a single month.
This feels backwards. The news is full of the conflict between the United States and Iran. That same Yahoo Finance report notes that President Trump had just rejected an Iranian proposal to reopen the Strait of Hormuz, a narrow sea lane that much of the world's oil passes through. Gold is supposed to be the thing people buy when the world looks dangerous. So why is it going down?
The short answer: the war is hurting gold through a side door. It pushes up oil, oil pushes up inflation fears, inflation fears push the US central bank to raise interest rates, and higher rates make gold less attractive. Below we walk through that chain, the leftover damage from last year's rally, what still holds gold up, and the signals you can watch yourself.
Gold has not fallen in a straight line this year. It hit a record, crashed, recovered part of the way, and is now sliding again. The table below shows the main moves.
Sources for the table: the World Gold Council's mid-year outlook (29 January and 24 June; the World Gold Council is the gold industry's research body), CNBC on 30 January and 20 March (which also dates the start of the war), Yahoo Finance on the CME margin hike (6 February), Yahoo Finance on 31 August, the Federal Reserve (16 September) and Yahoo Finance (28 September). A quick note: "spot" is the price for gold delivered now, while "futures" is the price agreed today for gold delivered later. The two are close but not identical.
The timeline shows the drops lining up with two kinds of news: things that pushed interest rates up, and things that pushed oil up. The next section explains why those two are really one story.
Iran sits next to the Strait of Hormuz. When fighting threatens that route, traders worry that less oil will reach the market, and prices rise. US crude oil went from near $57 a barrel at the start of the year to a peak of $113 in April, and was back above $100 by mid-September, according to a U.S. Bank market note.
Oil feeds into fuel, shipping, food and factory costs, so when it jumps, people expect prices in general to rise. That general rise is called inflation.
We can see this in the data. The Fed's preferred measure of underlying inflation, called core PCE (a price index that leaves out food and energy because they swing so much), rose from 3.0% in December 2025 to 3.3% in July 2026, U.S. Bank notes. The Fed's goal is 2%. When a market selloff hit in March, Yahoo Finance reported that the surge in oil was boosting inflation expectations, alongside a stronger dollar and rising bond yields.
Inflation alone does not sink gold. What matters is how the central bank reacts, which is the next link.
The Federal Reserve, or "the Fed," is the US central bank. Its main tool against inflation is its benchmark interest rate. Raising it makes borrowing more expensive, which slows spending and, over time, cools price rises.
On 16 September the Fed raised that rate by a quarter of a percentage point to a range of 3.75% to 4%. The vote was 12 to 0. In its official statement, the Fed said simply that "Inflation remains elevated." CNBC reported it was the first increase since July 2023, and that Chairman Warsh said tension in the Middle East also played a part in the decision.
More important for gold is what comes next. According to CNBC, 16 of the 18 officials who submitted forecasts expect another rate increase this year. As of 28 September, the CME FedWatch tool (which turns futures prices into odds for each Fed meeting) showed more than a 70% chance of another hike in October, Yahoo Finance reported. Markets move on what they expect.
So the war has produced higher expected interest rates. Why does that matter so much for a lump of metal?
Gold pays nothing. A bar in a vault does not earn interest or pay a dividend. That is fine when cash and bonds also pay little. It becomes a bigger cost when they pay more.
If a safe US government bond pays a solid return after inflation, holding gold means giving that return up. Economists call the return after inflation the "real interest rate." The yield on 10-year inflation-protected US Treasury bonds, a common measure of it, stood at 2.85% on 24 September, according to FRED, the St. Louis Fed's data site. CNBC noted that the regular 10-year yield had risen about a full percentage point since its February low.
The dollar adds a second push. Gold is priced in dollars around the world. When the dollar gets stronger, gold becomes more expensive for anyone paying in euros, yen or rupees, which can cool demand. Higher US rates tend to strengthen the dollar because they attract money looking for a better return. On 28 September, Yahoo Finance listed a stronger dollar, high bond yields and expected rate hikes as the three pressures on gold.
That explains most of the fall, but not why some drops were so violent. For that, look back at 2025.
Gold rose 66% in 2025, according to CNBC. A run like that draws in people who are chasing momentum rather than holding gold for the long haul. One analyst quoted by CNBC in March described a wave of hedge funds and retail traders who came in during 2025 and said that money "is not wedded to long term gold positioning."
Many of those traders used borrowed money through futures contracts. With futures, you only put down a deposit, called margin, rather than the full value. If the price falls, the exchange asks you to top up the deposit. That request is a margin call. If you cannot pay, your position gets sold for you. Forced sales push the price lower, which triggers more margin calls, and so on.
That is what happened at the end of January. A strategist quoted by CNBC said most of the 30 January drop was probably "forced selling" as margin calls went out. Then CME Group, which runs the main US gold futures market, raised the deposit needed for gold futures to 9% from 8% effective 6 February, its third increase in about a week, Yahoo Finance reported. Higher deposits make it more expensive to hold borrowed positions, which can push more traders to sell.
A crowded trade unwinding makes falls faster and deeper. But a very different group of buyers has kept buying.
In a true collapse, the biggest long-term holders would be leaving. The data says the opposite.
Central banks are still buying. National central banks hold gold as part of their reserves, and they tend to buy on a long schedule rather than trade the daily news. They bought 863 tonnes in 2025, the World Gold Council reported. After a slow start to 2026 (the first quarter was revised to 57 tonnes), buying picked up to 289 tonnes in the second quarter, "a record high for a second quarter," according to the World Gold Council's Q2 report. Poland led with 51 tonnes and China added 33 tonnes.
Gold funds hit a record in August. Gold ETFs are funds that trade on a stock exchange and hold physical gold for their investors. Worldwide, they took in US$18 billion in August, the second-largest monthly inflow on record, and their holdings reached a record 4,189 tonnes, the World Gold Council reported. The Council linked those flows partly to worries about currency policy and the US government bond market.
So gold is caught in a tug of war. On one side: higher rates, a strong dollar and short-term traders heading for the exit. On the other: central banks and long-term fund buyers. For now the first side is winning. Which side wins next depends on signals you can follow yourself.
You do not need a forecast to follow this. You need to know which five dials matter and where to read them.
Oil is the thread that ties these together. A lasting drop in oil, for example from a real ceasefire, would likely ease inflation fears and rate expectations at the same time. A new spike would do the reverse.
None of this tells you where gold will be next month. A single inflation report, a change in tone from Warsh or a surprise in the war can flip the story in a day, as January and August both showed.
Even professional forecasters give wide ranges. In its mid-year outlook, the World Gold Council said gold might trade within about 5% either side of $4,100 in the second half under current consensus, with a bullish case of $4,500 or above and a bearish case of 5% to 15% lower. That is an honest admission that the range is wide.
It also does not mean gold has stopped working as a long-term holding. A 25% drop from a record, after a 66% gain in 2025, is painful, but it is not a collapse.
If you hold gold for the long term, one practical point: some holders earn a return on their gold, for example by staking a gold token such as GGBR into stGGBR on StakeMyGold. That return is paid in gold, so it does not protect you from a falling gold price. It only changes what you earn while you hold.
Why is gold falling if there is a war? The war is pushing up oil, which raises inflation fears and leads the Fed to raise rates. Higher rates and a stronger dollar make gold, which pays no interest, less attractive.
How far has gold fallen from its record? Gold hit an intraday record of $5,595.47 on 29 January 2026, per the World Gold Council. On 28 September, futures traded near $4,189, per Yahoo Finance. That is roughly 25% lower.
Did the Fed really raise rates in 2026? Yes. On 16 September 2026 the Fed raised its benchmark rate by 0.25 percentage points to 3.75% to 4%, its first increase since July 2023. Most officials expect one more hike this year.
What is a margin call and why did it matter for gold? It is a demand to add money to a borrowed-money trade after the price moves against you. After the 2025 rally, many traders held gold this way, and forced sales made the January drop sharper.
Are central banks selling gold? No. Central banks bought 289 tonnes in the second quarter of 2026, a record for that quarter, according to the World Gold Council. Poland and China were among the biggest buyers.
Will gold go back up? Nobody knows. Watch the Fed, inflation data, the dollar, oil and fund flows, all free to track with the sources above.
Gold is falling in 2026 not because the world got safer, but because the war raised oil prices, oil raised inflation fears, and inflation fears pushed the Fed to raise rates for the first time since 2023. Higher rates and a stronger dollar make an asset that pays nothing harder to hold, and the unwinding of last year's crowded, borrowed-money rally has made the drops sharper. Against that, central banks and gold funds are still buying. It is a tug of war, not a collapse. The best thing you can do is watch the few signals that decide it, starting with the CPI release on 14 October and the Fed meeting on 27 to 28 October.
This article is for informational purposes only and is not financial advice.
| Date (2026) | What happened | Gold price |
|---|
| 29 January | All-time high | $5,595.47 intraday (spot) |
| 30 January | Warsh named as Fed chair pick; dollar jumps | Spot down about 9% to $4,895.22 |
| 6 February | CME raises gold futures margin to 9% from 8%, its third increase in about a week | n/a |
| 28 February | US and Israeli strikes on Iran begin the war | n/a |
| 20 March | Worst week since September 2011 (down 9.6%) | Futures $4,574.90 |
| 24 June | 2026 low so far | $3,959.33 (spot) |
| 31 August | Selloff after Warsh's hawkish Jackson Hole speech and renewed US-Iran strikes | Futures about $4,475 |
| 16 September | Fed raises rates to 3.75% to 4% | n/a |
| 28 September | Lowest since 5 August | Futures $4,188.90 |
