Jerome Powell Pops the Gold Bubble (For Now)

Gold cools off after red-hot rally as Middle East tensions ease and Fed inflation signals weigh on rate-cut hopes.

Editorial Team (ET)June 21, 2025

Gold’s rally is finally cooling off. After months of blistering gains that saw bullion flirt with all-time highs, the yellow metal is headed for its first notable weekly drop in weeks, retreating as geopolitical tensions simmer and the Federal Reserve reasserts inflation concerns. It’s a shift that has caught both traders and analysts recalibrating their expectations.

At just under $3,370 an ounce, gold is poised for a 1.8 percent weekly decline. That’s no small dip in a market that has been almost one-way upward since the beginning of the year. Up more than 28 percent in 2025 alone, gold has been the quintessential safe-haven asset in an increasingly chaotic world. But as the temperature of global conflict turns from boil to simmer, that appeal is momentarily fading.

A key reason for the recent pullback is the softening of tensions in the Middle East. US President Donald Trump struck a more measured tone this week, signaling that diplomacy remains on the table with Iran. His comments followed a period of heightened rhetoric that had investors worried about potential escalation with the region’s oil powers. Gold typically thrives in these uncertain moments, where fear fuels demand. But now, with the tone shifting, some of that safe-haven bid is evaporating into the weekend.

Dan Pavilonis, senior market strategist at RJO Futures, summed up the market mood: “The biggest part of gold being down today is the deescalation in the Middle East. Everything is kind of on a pause with Iran, Israel and the US.” Traders are now holding their breath instead of sprinting to hedge.

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