Gold Heads for Worst Week in Four Decades as War Reprices Rates
Gold was on track for its steepest weekly decline since 1983, as the war in the Middle East pushed energy prices higher and forced markets to scale back expectations for interest-rate cuts.
The selloff intensified as the US dollar and bond yields advanced after CBS reported the US is preparing for the possibility of deploying ground forces into Iran. Traders lifted the implied probability of a rate hike to 50% by October, reflecting concerns that a prolonged conflict could reignite inflation pressures. Higher rates typically weigh on gold because the metal offers no yield.
On the geopolitical front, a person involved in direct, high-level contacts with Tehran said Iranian officials have become reluctant to even discuss reopening the Strait of Hormuz as they focus on withstanding the attacks. The Wall Street Journal separately reported that the Pentagon is sending three warships and thousands of additional Marines to the Middle East.
Despite gold’s longstanding role as a haven, the metal has fallen every week since the US and Israel attacked Iran last month. The retreat has coincided with a stronger dollar and broad risk reduction across markets as investors weigh the knock-on effects of elevated energy costs on inflation and global growth.
StoneX Financial analyst Rhona O’Connell said the pullback reflects a mix of profit-taking and position liquidation as investors reassess the scope for monetary easing. She added that prices above $5,200 an ounce had drawn heavy buying, leaving the market vulnerable to a correction. As prices turned lower, stop-loss levels were triggered and selling accelerated, while technical signals—especially moving averages—added to the downward pressure.
O’Connell also pointed to forced selling linked to the equity rout as a possible contributor, alongside slower central-bank buying and outflows from exchange-traded funds that have further weighed on sentiment.
Bullion-backed ETFs were set for a third straight week of outflows, with holdings down more than 60 tons over that period, according to data compiled by Bloomberg.
Even after the recent slide, gold remained about 4% higher year to date. Prices hit a record just below $5,600 an ounce in late January, supported by strong investor demand, central-bank purchases, and concerns about potential threats to the Federal Reserve’s independence associated with President Donald Trump.
Spot gold fell 3.1% to $4,508.96 an ounce at 3:03 p.m. in New York, extending losses to an eight-session streak—the longest since October 2023. The drop pushed the 14-day relative strength index (RSI), a momentum gauge, below 30, a level some traders view as oversold.
Source : Newsmaker.id
