Gold and Silver Fall as Iran War Erodes Rate-Cut Hopes
Gold extended its decline to a seventh straight session as the escalating Middle East war pushed oil prices higher and reduced the odds of a near-term U.S. rate cut. The selloff also hit silver hard, underscoring that precious metals are currently being driven more by the “oil shock + rates” narrative than by traditional safe-haven demand.
Gold slid as much as 6.6%, putting it on course for its longest losing streak since 2023. Roughly three weeks into the Iran war, surging crude and natural-gas prices have revived inflation fears and made rate cuts by the Federal Reserve and other central banks less likely. That is a headwind for non-yielding bullion. Silver plunged more than 13% at one point before trimming losses.
Oil remained the central catalyst. Brent extended gains on Thursday after strikes hit some of the Persian Gulf’s most important energy facilities. A day earlier, the Fed held rates steady and projected only one cut this year, with Chair Jerome Powell emphasizing that any reduction would depend on clear progress toward slower inflation. “It’s an interest rate and oil story here,” said Bart Melek, global head of commodity strategy at TD Securities, adding that markets are increasingly worried about slower growth alongside higher inflation.
The escalation also fueled broader risk aversion. Global stocks and bonds sold off, forcing some investors to liquidate precious-metal positions to raise cash, according to Melek. In addition, some flows have rotated away from metals into assets viewed as direct beneficiaries of higher energy prices, said Aakash Doshi, global head of gold and metals at State Street Investment Management.
Pressure spread to mining equities as well. Shares of gold producers tumbled, and the VanEck Gold Miners ETF—the world’s largest ETF tracking gold-mining companies—erased its gains for the year, highlighting the breadth of the move across the precious-metals complex.
Gold was also weighed down by persistent outflows from gold-backed ETFs in recent weeks. ETFs, a key channel for Western retail and institutional exposure to bullion, tend to be particularly sensitive to interest-rate expectations; as markets reprice toward higher-for-longer policy, ETF demand typically softens, adding another layer of pressure to prices.
Still, the selloff has attracted strong retail buying of physical bars and coins, according to StoneX Bullion, suggesting that price dips are drawing bargain hunters even as institutional flows remain cautious. Gold is still up more than 6% this year, but momentum has stalled sharply as the war-driven energy shock complicates the rate outlook.
In the latest update, spot gold was down 4.3% to $4,611.05 an ounce, while silver fell 5.3% to $71.40. The Bloomberg Dollar Spot Index was down 0.6%, offering limited relief against the dominant oil-and-rates headwinds.
Source : Newsmaker.id
