2026-10-27 — COINOTAG

Gold (XAU) has given up roughly 25% of its value since the United States and Iran went to war, a decline that has unfolded against a tightening policy backdrop at the Federal Reserve.

The US central bank raised interest rates in September, and markets now attach approximately an 80% probability to another hike in December. According to the original report, prices briefly touched $3,975 an ounce. For readers following the metal, the December Federal Reserve meeting is the next scheduled point at which those rate expectations will be either confirmed or revised, making the run-up to that decision the immediate backdrop for gold trading.

The Rate Backdrop

Gold occupies a distinctive position among financial assets: it pays no interest or dividends. Its relative appeal is therefore closely tied to the level of real interest rates. When the Federal Reserve tightens monetary policy, yields on interest-bearing assets such as Treasury securities and bank deposits rise, increasing the opportunity cost of holding non-yielding bullion. Historically, extended periods of rate increases have tended to coincide with pressure on gold prices, all else being equal.

Expectations for future policy are an equally important variable for traders. The probabilities that markets assign to upcoming Federal Reserve decisions feed into the US dollar and real yields, both of which are closely watched determinants of demand for the metal. With investors currently pricing a high likelihood of an additional increase in December, that expectation forms the immediate macroeconomic context for gold's recent decline. Because these probabilities are continuously repriced as new information reaches markets, the policy outlook itself — not only any eventual decision — remains an active input into day-to-day gold pricing.

Safe-Haven Demand in Conflict Periods

Geopolitical conflict has traditionally been regarded as a supportive factor for gold, as investors have long used the metal as a store of value during periods of uncertainty. The recent stretch of trading has therefore taken place while two of gold's traditionally significant influences — demand for havens during wartime and a rising interest-rate environment — have both been in play. The current episode illustrates that haven demand, while a recurring historical pattern, is one of several forces acting on the metal at any given time rather than an automatic outcome of conflict alone.

This content was first published on COINOTAG: https://en.coinotag.com/gold-lost-25-percent-since-us-iran-war-began