Gold Slips Below US$4,500 As Middle East Tensions Spike on Tuesday

Ved Shah

Good evening ladies and gentlemen, welcome back to The Australian Gold Mid-Weekly Review! Every Thursday/Friday, we knock on your mailbox to deliver the latest insights into the precious metals and mining market.

Gold has slipped below the US$4,500/oz mark this week, while silver is currently trading around US$74/oz. The weakness follows renewed tensions between the United States and Iran, which reignited concerns about higher energy prices and the possibility that inflation remains stickier than markets had hoped. As a result, investors have been reassessing expectations for interest rate cuts and the path forward for global monetary policy.

The same geopolitical concerns have also pushed oil prices higher, with Brent crude currently trading around US$93/bbl. Higher oil prices feed directly into inflation expectations, which is one of the key reasons precious metals have struggled to gain momentum despite the heightened uncertainty.

Meanwhile, the ASX All Ordinaries Gold Index has fallen to approximately 16,370 points, representing a decline of almost 600 points in a single day. While gold miners continue to benefit from historically strong gold prices, broader market sentiment and weakness in the underlying gold price have weighed on the sector in the short term.

Looking ahead, attention is now turning towards the Reserve Bank of Australia, which meets on June 16, just two weeks from now. The RBA cash rate currently sits at 4.35% following three consecutive rate hikes this year in February, March and May. Importantly, all of last year's rate cuts have now been fully reversed.

What happens next remains a matter of debate. ANZ, Commonwealth Bank and NAB all expect the RBA to pause in June, while Westpac stands alone in forecasting another rate hike.

This creates an interesting dynamic for Australian gold investors. The Australian dollar has been one of the strongest major currencies in 2026, rising approximately 3.7% year-to-date. Australian interest rates are now above U.S. rates, an unusual situation that has helped support the currency.

While the U.S. dollar gold price remains roughly 20% below its highs, Australian gold miners are not benefiting from a stronger AUD as that translates to a lower amount of Australian dollars to purchase the same amount of gold in U.S. dollar terms.

There are two key scenarios to watch on June 16. If the RBA pauses, the Australian dollar could soften, providing a boost to the Australian dollar gold price and supporting local gold producers. If the RBA hikes again, the Australian dollar may strengthen modestly, but it would also reinforce the view that inflation remains entrenched, which remains supportive for gold over the longer term.

Either way, the broader gold thesis remains intact.

And that's it for this week's Australian Gold Mid-Weekly Review. We'll be watching both developments in the Middle East and the upcoming RBA decision very closely over the next two weeks. Until next Wednesday, thank you for reading and we'll see you again soon.

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