It’s been a while since we did a weekly update, so I wanted to take a step back and see what’s been happening with gold and silver since the beginning of the month.
The price of gold briefly broke above US$5,400 an ounce as March began, in response to US and Israeli attacks on Iran. There have been ups and downs since then, but overall less trading.
Silver performed much the same during that period, with the price rising to over US$96 an ounce when the war first broke out and then falling to the current level of US$80.
Both precious metals are generally seen as safe havens during turmoil, so why haven’t prices remained higher? I was at the Prospectors and Developers Association of Canada (PDAC) conference during the early days of the war, and the experts I heard from emphasized that although gold and silver tend to rise initially in times of conflict, their gains often do not last long.
Here’s Adrian Day of Adrian Day Asset Management explaining that trend:
“Geopolitical events usually have very short-term surges. The classic case would be the Russian invasion of Ukraine, where the price of gold went up meaningfully over the next two, three, four weeks, because Russia was amassing troops on the border, and all the speculation was about war. But the day those tanks crossed the border, gold peaked, and within three weeks it was back to where it was before it started.
Additionally, precious metals prices are being weighed down by strength in the US dollar, which hit its highest point in 2026 this week. two main factors Behind this.
The first is that a large part of global oil trade is denominated in US dollars, and the second is that America is the world’s top oil producer. Commodity prices surged above US$100 a barrel and into triple-digit territory this week as tensions escalated in the Middle East.
At this point, it’s impossible to say how the situation will play out, but market watchers say it really depends on how long the Iran war lasts.
I also heard from Rick Rule of Rule Investment Media at PDAC, and he put it this way:
“The fact that oil can’t transit the Strait of Hormuz, where about 50 percent of the world’s exported crude oil – not total crude oil, but crude oil exported – transits, is a problem. And if the Iranians are able to continue to manage the shutdown in the Strait, world oil markets will feel it, and they will feel it in spades. There’s plenty of oil around for the next three weeks, but the anticipation of what might happen four weeks later “Is, provided the shutdown continues, (is) a) very different story.”
At the moment, oil supply looks uncertain, says Iran’s new supreme leader first public statement The Strait of Hormuz should be kept closed “as a tool to exert pressure on the enemy”.
A spokesperson from Iran reportedly said The future could see oil priced at US$200 – which would be well above the oil price record of approximately US$147 set in 2008.
Oil prices have been volatile despite efforts to stabilize countries around the world – at midweek, the International Energy Agency said 32 of its member countries agreed to release 400 million barrels of oil from their reserves. According to the organization, this is the largest oil stock release ever in its history, and only the sixth since its founding in 1974.
Returning to gold, it is worth noting that this week also brought the release Latest US Consumer Price Index (CPI) data. It showed the index of all goods rose 2.4 percent year-on-year in February, in line with analysts’ expectations, while the core CPI, which excludes volatile food and energy categories, was up 2.5 percent over the same period.
The US Federal Reserve looks at the CPI when making interest rate decisions, but its preferred inflation gauge is the personal consumption expenditures (PCE) price index. january number Revealed on Friday (March 13), it showed a year-on-year increase of 2.8 percent; Core PCE was up 3.1 percent.
Beyond PCE data, analysts were suggesting That it will come above the CPI, the ongoing move in this direction will continue. But there are also questions about what impact higher oil prices will have on inflation in the coming months – headlines about stagflation, characterized by higher prices, higher unemployment and slower economic growth – are already spreading.
The Fed’s next meeting is scheduled for March 17-18, and the CME Group (NASDAQ:CME) FedWatch tool currently shows the central bank is widely expected to remain accommodative this time around. We’ll review what happens in next week’s update.
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Securities Disclosure: I, Charlotte McLeod, have no direct investment interest in any of the companies mentioned in this article.
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