Gold and silver experienced sharp declines from their January 2026 peaks despite escalating US-Iran conflict and rising inflation. Gold fell approximately 23% from its January 2026 high of $5,608 per ounce to $4,331 on June 5, 2026, while silver dropped roughly 44% from above $121 to around $67.30. The decline followed Kevin Warsh's swearing-in as Fed Chair on May 22 and a May payrolls report showing 172,000 jobs against an 85,000 consensus estimate, which pushed rate-hike expectations higher. The reversal challenges traditional safe-haven behavior, as metals sold off during conditions—including US CPI reaching 3.8% year-over-year in April 2026 and Strait of Hormuz disruptions—that historically drive buying pressure.
Gold Falls 23% from January 2026 Peak to June 5
Gold peaked at $5,608 per ounce in late January 2026 before reversing sharply. By June 5, it had fallen approximately 23% from that record. Silver's correction has been steeper, dropping roughly 44% from its high above $121 to around $67.30. Spot data on June 5 showed gold bid at $4,328 with a daily loss of 3.27%. Silver bid at $67.72, off 8.19% on the session.
Platinum and palladium joined the rout. Platinum fell 6.23% to a $1,775 bid. Palladium dropped 6.87% to $1,207.
Safe-Haven Assets Decline Amid War and Inflation
The U.S.-Iran conflict disrupted Strait of Hormuz shipping lanes, pushed oil above $100 per barrel at its peak, and helped lift US CPI to 3.8% year-over-year in April 2026. Under standard conditions, that combination would generate sustained buying pressure in gold.
Instead, traders moved the other way. The same inflation data that should boost gold has reinforced the case for a hawkish Federal Reserve. Higher expected rates raise the opportunity cost of holding a non-yielding asset. Real yields climbed. The US dollar held firm on rate differential support, making dollar-denominated gold more expensive for foreign buyers.
The X account Bull Theory wrote on Sunday morning: "The assets the entire world buys to protect against war and inflation just did the exact opposite of what they were supposed to do. Gold hit an all-time high of $5,600 on January 29, up 31% in just 29 days, adding $9 trillion to its market cap. Silver hit $121 the same month, up 68% in 29 days, adding $3.5 trillion to its market cap. Every safe haven buyer was positioned perfectly."
Bull Theory added: "Then the U.S.-Iran war escalated in February, the Strait of Hormuz closed, oil hit $93, and inflation climbed to 3.8%. These are exactly the conditions gold and silver are supposed to thrive in. Instead, gold has now crashed 23% from its peak, wiping out $8 trillion in market value. Silver crashed 44%, wiping out $3.5 trillion. Both are now negative for 2026."
Kevin Warsh Fed and May Jobs Report Shift Rate Expectations
Kevin Warsh was sworn in as Fed Chair on May 22. His arrival followed a May jobs report showing 172,000 nonfarm payrolls against an 85,000 consensus estimate. That number, combined with upward revisions, shifted federal funds futures toward a higher terminal rate and raised the probability of a December rate hike.
The result: metals traders who entered 2026 positioned for rate cuts have spent five months unwinding those bets.
Central Banks Add Gold as Western Investors Exit
The structural bull case for gold remains intact in the background. Central banks, led by Poland, China, and Uzbekistan, continued net purchases through Q1 2026. China resumed buying in April, adding approximately 19 tonnes. Physical silver markets remain tight due to solar panel and electronics demand.
That structural demand has not been enough to offset Western investor outflows and speculative deleveraging. The January rally attracted heavy positioning. When the rate-cut narrative faded, leverage unwinds and technical breaks followed.
FOMC Meeting Scheduled June 16-17
The Federal Open Market Committee (FOMC) meets June 16 and 17 in Warsh's first meeting as Chair. A hold is widely expected. The dot plot, Summary of Economic Projections, and Warsh's press conference tone will be the key variables to watch closely.
JPMorgan and others have maintained longer-term price targets in the $5,000 to $6,000 range. Near-term forecasts have been revised lower given the rate environment. Metal-focused proponents have noted that the core drivers from 2025, including policy uncertainty, dollar trajectory, geopolitics, and equity valuations, remain structurally in place despite the pullback.
FAQ
Why did gold and silver fall despite geopolitical tensions in 2026?
Gold fell 23% from its January 2026 high of $5,608 per ounce to $4,331 on June 5, 2026, and silver dropped 44% from above $121 to around $67.30. The decline occurred because the May payrolls report showing 172,000 jobs against an 85,000 consensus estimate shifted federal funds futures toward a higher terminal rate. Higher expected rates raise the opportunity cost of holding non-yielding assets like gold and silver, causing traders to unwind positions despite US-Iran conflict and US CPI reaching 3.8% year-over-year in April 2026.
What did central banks do with gold purchases in April 2026?
Central banks added approximately 19 tonnes of gold in April, with China resuming buying during that month. Poland, China, and Uzbekistan led net purchases through Q1 2026. However, this structural demand has not been enough to offset Western investor outflows and speculative deleveraging that followed the shift in Federal Reserve rate expectations after Kevin Warsh was sworn in as Fed Chair on May 22.
When is the next Federal Reserve meeting under Kevin Warsh?
The Federal Open Market Committee (FOMC) meets June 16 and 17 in Warsh's first meeting as Chair. A hold is widely expected. The dot plot, Summary of Economic Projections, and Warsh's press conference tone will be the key variables traders watch for signals on future rate policy.
