US Stock Market Highlights: Stocks edge lower as Iran crisis deepens; Nasdaq, S&P, Dow end marginally lower

Morgan Stanley has lowered its outlook for gold, citing weaker-than-expected performance since the onset of the US-Israeli conflict with Iran and shifting macroeconomic dynamics.

The brokerage now expects gold prices to rise to $5,200 per ounce in the second half of 2026, down from its earlier bull-case estimate of $5,700. The precious metal is currently trading around $4,830.

“We remain constructive on gold but with less upside than before,” commodities strategist Amy Gower and her team said in a note on Monday.

A key factor behind the downgrade is the risk of elevated energy prices feeding into core inflation, which could reduce the likelihood of aggressive rate cuts by the US Federal Reserve.

“With the conflict triggering an energy supply shock that has reduced hopes for lower Fed rates, it is not surprising that gold has struggled to work as a safe haven this time,” the note said.

Gold has declined about 8.5% since the start of the conflict, with analysts attributing the sharp correction in part to its strong run-up ahead of the geopolitical escalation.

Despite the near-term pressure, Morgan Stanley still expects the Fed to deliver two rate cuts this year—higher than the central bank’s current projection of one cut. The brokerage said such a scenario could support gold prices, particularly through ETF flows that are sensitive to shifts in monetary policy.

CNBC