Gold has not only lost all the gains it made earlier this year, but has now fallen more than 7% below its starting level. Why?The first blow to the precious metal came from a technical factor — specifically, the CME Group’s increase in margin requirements for COMEX gold futures in early February, due to rising market volatility. Higher margins forced traders to post more capital, triggering liquidation and weighing on prices. The second blow stemmed from the U.S. and Israel's conflict with Iran. Although geopolitical uncertainty should have boosted demand for safe-haven assets, the disruption of traffic through the Strait of Hormuz triggered an energy crisis, which in turn led to higher inflation: headline CPI is now running at 4.2% in the U.S., 3.2% in the eurozone, and 4.8% across emerging markets, up roughly 1.5 percentage points since the start of the year, according to S&P Global Ratings.With inflation running well above central bank targets, policymakers have toughened their rhetoric, while others — like the ECB — have raised interest rates.Unlike bonds, deposits, or dividend-paying stocks, gold doesn't generate any income. When yields rise, the opportunity cost of holding a non-yielding asset increases. On top of that, a stronger US Dollar continued to weigh on the metal.Now that the Strait of Hormuz has partially reopened, oil prices are falling, and gasoline is getting cheaper; shouldn’t gold (XAUUSD) be soaring?Just because a war ends doesn’t mean inflation pressures will disappear overnight. That process takes months, which is why markets, instead of expecting the Federal Reserve to cut rates this year, are pricing in not one but potentially two rate hikes.That is also why U.S. Treasury yields have been slow to decline.Another headwind for gold is the strong rally in AI stocks, which may keep money flowing into equities instead of precious metals, similar to what happened during the oil price surge. In summary, ending the conflict in the Middle East alone may not be enough for the “golden spring” to snap upward, as the economic aftereffects of a disruption to the Strait of Hormuz are likely to linger for months, keeping central banks reactive to lower interest rates.At the same time, financial markets are forward-looking: by the time central banks begin softening their rhetoric as inflationary pressures ease, much of that positive news may already be priced into gold. This article was written by IL Contributors at investinglive.com.