The impact of the Iran war has also affected the global gold market. Global gold prices fell more than 5 percent on Monday to the weakest position since 2026. The collapse followed the worst weekly decline in nearly 43 years. As the conflict in the Middle East intensifies, concerns over inflation and expectations that interest rates around the world may rise have intensified.
According to news agency Reuters, gold prices in the spot market (gold sold immediately and delivered in the immediate future) fell 5.8 percent to $4,226.16 an ounce by 6:33 a.m. GMT, the lowest since December 11. The decline continued today for the ninth straight day.
The precious metal fell more than 10 percent last week, its biggest weekly decline since February 1983. Gold has already fallen more than 20 percent from a record high of $5,594.82 an ounce on January 29. US gold futures for April delivery fell 7.5 percent to $4,231.80.
Tim Waterer, chief market analyst at KCM Trade, a market analyst firm, said that as the Iran conflict continued into its fourth week, oil prices hovered around $100, and the expectation of interest rate cuts has faded away. As a result, gold’s attractiveness as a non-yielding asset has diminished.
Yesterday, Iran said on Sunday that if US President Donald Trump implements the threat of attacking Iran’s electricity grid within 48 hours, they will hit the energy and water infrastructure of the Gulf neighboring countries in retaliation.
As a result, Asian stock markets also fell and oil prices remained well above $110 per barrel. Waterer added that high liquidity is now the danger for gold. In this time of risk aversion, investors are selling gold shares to meet margin calls in other assets as the stock market falls.
Crude oil prices remain high due to the closure of the Strait of Hormuz. This increases the cost of transport and production and increases the risk of inflation. Generally, rising inflation increases demand for gold as a safe-haven investment, but higher interest rates reduce demand for this non-interest-bearing asset.
BMI, a unit of Fitch Solutions, said a shift away from safe-haven investments and an increased tendency to take positions based on broader economic trends could pose a further downside risk to gold prices. A strong US dollar and a reduced chance of the Federal Reserve cutting interest rates are the main concerns for the market right now.
According to CME’s FedWatch tool, market expectations that the US Federal Reserve may raise interest rates this year have increased. A rate hike at the end of 2026 is now more likely than a cut.
Prices of other precious metals also fell sharply. Spot silver fell 8.9 percent to $61.76 an ounce. Platinum fell 9 percent to $1,749.31 and palladium fell 5.2 percent to $1,330.50.
