Levelling Off: After a Month-Long Descent, Gold Finds Support at $4,186 — but the Headwind Has Changed

Every pilot knows that after a sustained descent, the most important moment is levelling off — finding the altitude where the aircraft stabilises before deciding whether to climb again. Gold has been in a month-long descent, falling about 8.25% and declining for three straight weeks. This Monday June 22, with the metal bouncing 1.1% to $4,186 off Friday’s low, it appears to be levelling off. But the experienced pilot also reads the instruments carefully — and the instruments show that the headwind pushing gold down has changed direction entirely.

For four months, the headwind was the Iran war — the Strait of Hormuz closure driving oil and inflation. That headwind has now faded. The proof came on Friday: the US-Iran peace signing in Switzerland was cancelled, the talks stalled, and the peace deal hit an early snag. In the old flight conditions, this geopolitical setback would have been a powerful updraft, lifting gold on safe-haven demand. Instead, gold barely moved on the news. The Iran headwind has lost its force over the aircraft.

The new headwind is the Federal Reserve, and it is strong. Last Wednesday, new Chair Kevin Warsh delivered a hawkish shock — nine of eighteen officials projecting a 2026 rate hike, the easing bias removed. The US dollar climbed to a 13-month high. Markets now price 66% to 70% odds of a rate increase by September. This is the wind now pushing against gold, and it is why the metal descended last week even as the Iran situation deteriorated. Goldman Sachs read the same instruments and adjusted its flight plan, cutting its year-end target to $4,900 from $5,400.

But here is the crucial navigation insight. This new Fed headwind, like the old Iran one, is connected to inflation — and inflation is set to fall. The Fed is hawkish because of the 4.2% inflation the war created. With oil now collapsed toward $78, that inflation will fade over the coming months. When it does, the Fed headwind weakens, and the prevailing wind — central bank demand, structural scarcity, the deep bull-market forces — can lift gold again. The aircraft is levelling off at $4,186 precisely because those structural engines are still running: central banks added 19 tonnes in April, and 45% plan to buy more this year. That is the floor holding the altitude.

The instruments to watch this week are US Q1 GDP and PCE inflation data. A reading showing inflation easing would weaken the Fed headwind and clear gold for a climb. A strong reading would keep the headwind blowing and could push the aircraft down to retest $4,100.

The destination remains above current altitude, even if it has been revised. Goldman now sees $4,900 by year-end — a 17% climb from here — and other banks remain higher. The aircraft has levelled off after a hard descent. The headwind has changed from Iran to the Fed, but it is the same kind of headwind, tied to inflation that is set to fade. The structural engines hold the altitude. Watch this week’s data for the next clearance to climb.

24K: $134.61/gram | 22K: $123.39/gram

All prices USD. Monday June 22 indicative.