Gold slipped back below 5,000 psychological level in Asian trading today, and the decline reveals an unusual dynamic dominating markets in 2026: escalating war is failing to lift Gold. Despite intensifying conflict involving the U.S., Israel and Iran in the Middle East, investors are increasingly abandoning the metal in favor of the Dollar, creating what could be described as a “Safe Haven Paradox.”
The reason lies in the energy shock rippling through global markets. Brent crude remains anchored near the 100 level as instability threatens supply routes across the Middle East. As a result, the dominant market concern has shifted away from geopolitical risk itself and toward the inflation consequences of surging energy prices.
Rising energy costs risk keeping inflation sticky, forcing investors to rethink the outlook for monetary policy. Markets are rapidly pricing out Fed rate cuts for 2026, while speculation is growing that other major central banks may also need to keep policy tighter.
That shift has pushed Treasury yields higher and strengthened Dollar broadly. For Gold, the environment is hostile. As a non-yielding asset, the metal becomes less attractive when interest rates rise, while Dollar benefits simultaneously from higher yields and its status as the world’s deepest liquidity haven.
Technically, last week’s recovery to 5,238.55 was somewhat stronger than expected. Nevertheless, the broader structure of Gold’s correction remains intact. The decline from 5,419.02 is viewed as the third leg of the corrective pattern following the 5,598.38 peak.
The break below 4996.03 support today signals that this decline has resumed. The next target at 100% projection of 5,419.02 to 4,996.03 from 5,238.55 at 4,815.55. This level is the key near-term focus for traders. Firm break there would prompt downward acceleration to 161.8% projection at 4,554.13.
Looking further ahead, Gold is seen as correcting the broader uptrend that began from 2022 low at 1614.60. Deeper fall is likely to 4,000 region, which is slightly below 38.2% retracement of 1,614.60 to 5,598.38 at 4,076.57, or a bit lower to 55 W EMA (now at 4,005.22)
Though, that zone is likely to attract longer-term buyers and may eventually serve as the foundation for the next bullish cycle in the precious metal.
