The price of gold has seen its biggest weekly decline in more than forty years, falling to US$4,100 an ounce in morning trading on Monday (23 March).
The yellow metal’s safe-haven status has lost its edge in the face of an unprecedented storm of macroeconomic and geopolitical factors.
The price of silver also suffered a big fall, hitting a low of around US$61 an ounce in intraday trading – the white metal has lost almost half of its all-time high posted just eight weeks ago. Silver often reacts with greater price fluctuations than gold, as it is a much smaller market and more tied to industries that can be negatively impacted by economic impacts on sectors such as solar panels, AI infrastructure, and electronics.
At the center of this storm is the US-Iran war and the closure of the Strait of Hormuz, due to which Brent crude oil prices have soared well above US$100 per barrel. With global inflation fears now supercharged, the Federal Reserve signaled last week that interest rates could remain high for a longer period of time, dashing previous expectations of a 2026 rate cut.
Since the US dollar is also a petro dollar, the greenback has reached a record high. This makes gold and silver more expensive for global buyers, especially China and India. At the same time, 10-year Treasury yields are moving higher, also reducing the investment appeal of non-yielding assets like gold and silver bullion.
Global stock markets are also being affected by the uncertainty arising from the conflict in the Middle East, which has led to a massive selloff in equities in recent days. In this scenario, institutional investors often sell liquid assets such as precious metals to raise cash and cover margin calls.
Will the prices of gold and silver fall further?
Is this the end of the rally in these precious metals?
“In my view, gold continues to maintain strong structural bullish momentum supported by solid fundamentals, particularly ongoing global economic uncertainty and growing institutional demand for hedging,” Rania Gule, Senior Market Analyst at XS.com, said in a market commentary shared with Investing News Network (INN). “However, this momentum does not move in a straight line; it is often interrupted by sharp corrections that are necessary to rebuild long positions.”
Gulley believes that given the current environment, a deep correction to US$3,800 an ounce is not out of the realm of possibility. The potential is high if bond yields continue to rise and the dollar remains strong. However, he does not believe such a move would be a bearish signal, but rather an opportunity for investors who believe in the long-term story of gold.
“In the short term, especially in the coming week, I lean towards a consolidation scenario with a slight bearish bias, especially in the absence of new catalysts to support further upside. This does not mean a lack of opportunities; on the contrary, such market conditions can provide favorable setups for short-term traders, provided they apply disciplined risk management,” Gulley said. “However, for medium to long-term investors, the focus should remain on the broader trend rather than short-term fluctuations.”
Both gold and silver prices improved slightly in Monday morning session after US President Donald Trump’s arrival. said That his team “carried out meaningful negotiations regarding the full and comprehensive resolution of our hostilities in the Middle East”, leading him to “postpone for at least five days any and all military attacks against Iranian power plants and energy infrastructure”.
As of 9am PST, gold was trading at US$4,373.11 an ounce while silver was trading at US$68.39 an ounce.
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Securities Disclosure: I, Melissa Pistilli, do not have any direct investment interest in any of the companies mentioned in this article.
