Gold Prices Plunge Over 3% as Iran Conflict Fuels Inflation Fears

Gold Prices Plunge Over 3% as Iran Conflict Fuels Inflation Fears​

Bullion Nears Erasing 2026 Gains Amid Rising Geopolitical Tensions​

Gold prices dropped sharply, falling more than 3 percent and nearing the point of wiping out all gains made this year, as escalating tensions between the United States and Iran rattled global markets.

Bullion declined as much as 3.8 percent to around $4,320.30 per ounce, placing it less than a dollar above its closing level at the end of last year, when it stood at $4,319.37 per ounce. The metal has now recorded losses for eight consecutive sessions and posted its steepest weekly decline since 1983.

Inflation Concerns and Interest Rate Outlook Weigh on Gold​

The ongoing Middle East conflict, now in its fourth week, has driven oil prices higher, intensifying inflation concerns. This has reduced expectations of near term interest rate cuts by the US Federal Reserve and other central banks.

Higher interest rates typically weigh on gold, as the metal does not offer yields, making it less attractive compared to interest-bearing assets.

Market Volatility Triggers Forced Selling​

Gold’s decline has also been influenced by broader market volatility. Investors have been selling bullion to offset losses in other asset classes, contributing to downward pressure.

Market movements remained uneven, with crude oil prices retreating after initial gains and equities showing volatility. Since the conflict began on February 28, gold has faced persistent selling pressure.

US-Iran Tensions Escalate Over Strait of Hormuz​

Geopolitical tensions escalated further over the weekend after US President Donald Trump issued a two day ultimatum to Iran to reopen the Strait of Hormuz, warning of potential strikes on Iranian power plants.

In response, Iran stated it would completely shut the strategic waterway and target critical infrastructure including energy, information technology, and desalination facilities if its power plants were attacked.

Technical Indicators Suggest Possible Short Term Bounce​

Despite the ongoing decline, some market indicators point to a potential short term rebound. Gold’s 14 day relative strength index has fallen below 30, a level often interpreted by traders as indicating oversold conditions.

Data released on Friday also showed that hedge funds and large speculators increased their net long positions in gold to the highest level in seven weeks as of March 17.

Other Precious Metals Also Decline​

At 9:00 a.m. Singapore time, spot gold was down 3.3 percent at $4,343.40 per ounce. Other precious metals followed suit, with silver falling 3.4 percent to $65.61, while platinum and palladium also recorded losses.