Gold Settles at a Two-Week High as Peace Talks Rewire the Inflation Trade

Today's video recorded by Konrad Urbanowicz

Gold futures closed at their highest level since June 22 on Monday, and the path they took to get there tells us as much about this market as the price itself. The most active August contract settled up 1% at $4,167.50 per troy ounce, with front-month futures finishing at $4,155.10. Spot gold, however, gave back late in the session, easing 0.3% to $4,163.64 after touching the same two-week high — a divergence worth unpacking.

The Inversion at Work
Regular readers know I have spent much of this year writing about what I call gold's inversion dynamic: geopolitical fear no longer flows directly into bullion the way it did for decades. Instead, it routes through oil prices, into inflation expectations, and finally into Federal Reserve policy — and only then does it reach gold. Monday's action was a textbook illustration, running in reverse.

Diplomatic progress in the Middle East, which in an earlier era would have drained the fear premium out of gold, instead lifted it. Rhona O'Connell of StoneX captured the mechanism in a note Monday, citing peace efforts as easing global inflation concerns and directing money back toward precious metals. Cooler geopolitics means cooler oil, cooler oil means softer inflation, and softer inflation means a Federal Reserve with less reason to tighten. In the inverted market, peace is bullish.

O'Connell added one important caveat: the investment-demand side of the ledger remains thin. "Gold ETFs are still friendless," she wrote — a reminder that this rally is being carried by the futures market and macro repositioning rather than by broad-based fund inflows.

The reason losses stayed shallow sits in last week's employment data. June's payroll report showed a marked slowdown in U.S. job growth alongside downward revisions to the prior two months. Markets responded by scaling back expectations of a near-term Fed rate hike, and as of Monday the CME FedWatch Tool puts the probability of a September hike at roughly 57% — elevated, but no longer a foregone conclusion. For a non-yielding asset like gold, every basis point that comes off the tightening path is a tailwind.

The next catalyst arrives Wednesday, when the Fed releases the minutes from its last meeting. As Wyckoff noted, traders will be combing those minutes for clues about the trajectory of monetary policy, and any surprise would certainly move markets. Chairman Warsh's hawkish posture has been the dominant weight on gold all year; the minutes will tell us whether the committee shares his conviction or whether the softening labor market is beginning to open cracks in it.

Measuring the Correction
Context matters here. Gold spent the first half of 2026 correcting from gold futures all-time high of $5,623.80 set in late January — a decline that bottomed at $3956 in late June. Monday's settlement puts the market well above that low, and the character of the advance off the June bottom has been constructive: higher lows, expanding participation on up days, and now a close above the late-June congestion zone.

Where does it go from here? The forecasts on my desk cluster in a fairly tight band. Louis Navellier of Navellier & Associates sees a return to around $4,500, pointing to the central bank buying pressure that drew many institutional investors into the metal in the first place, along with the potential for renewed quantitative easing by European central banks. J.P. Morgan, in a note released Friday, tempered its demand outlook but still projects $4,300 in the third quarter and $4,500 in the fourth.

We will let the charts — and the convergence of the evidence — be our guide.
Wishing you, as always, good trading,

Gary S. Wagner
Executive Producer