Key Takeaways
- Gold experienced an 8% weekly decline, marking its steepest drop since the beginning of 2020
- The late February U.S.-Israel military action against Iran sparked inflation concerns that pressured precious metals
- The Federal Reserve, ECB, and other major central banks maintained current interest rates while signaling limited future reductions
- Silver experienced a sharper decline of nearly 10% this week due to heightened dollar sensitivity
- Gold breached its post-conflict trading range of $4,800–$5,200 per ounce
Precious metals saw a modest rebound on Friday, though gold remains headed toward its third consecutive weekly decline. Spot gold increased approximately 1.4% to reach $4,715 per ounce, while futures contracts advanced roughly 2.4%.
Friday’s marginal gains couldn’t offset the broader weekly trend, with gold declining more than 8% over the period. This represents the metal’s most severe weekly downturn since the early months of 2020.
Since the U.S.-Israel military strike on Iran commenced in late February, gold had maintained a relatively stable trading corridor between $5,000 and $5,200. This week’s sharp selloff drove prices decisively beneath that established range.
The ongoing military engagement has intensified worries about accelerating energy costs and broader inflationary pressures. Crude oil prices surged to nearly four-year peaks this week following attacks on Middle Eastern energy facilities.
Global central banks have reacted to these inflationary indicators with notable policy decisions. The Reserve Bank of Australia implemented an interest rate increase. Meanwhile, the Federal Reserve, European Central Bank, Swiss National Bank, and Bank of Japan all maintained their existing rate structures.
Crucially, these institutions delivered hawkish messaging, indicating that monetary easing remains improbable in the immediate future. This guidance proved particularly damaging for gold, as lower interest rates typically provide support for the yellow metal.
The Federal Reserve maintained its current policy stance on Wednesday while cautioning that inflationary pressures could intensify. Although gold traditionally serves as an inflation hedge, elevated interest rates enhance the appeal of yield-generating investments relative to non-yielding assets like precious metals.
Dollar strength added additional downward pressure on gold. An appreciating greenback increases the cost of gold for international buyers using alternative currencies, potentially dampening global demand.
The dollar retreated somewhat on Friday, providing temporary relief for gold prices. Multiple central banks indicated potential rate increases, which strengthened their respective currencies against the U.S. dollar.
Silver Faces Even Steeper Losses
Silver experienced a more pronounced decline of nearly 10% this week, surpassing gold’s percentage loss. Spot silver gained 0.5% on Friday to reach $73.14 per ounce, though this modest recovery only marginally reduced the week’s substantial losses.
OCBC analysts noted that silver demonstrates greater vulnerability to dollar fluctuations and shifting risk appetite compared to gold. The firm indicated it may adjust its silver price forecasts “modestly lower” in response to current market conditions.
Silver also confronts headwinds from potential economic deceleration, which could diminish industrial consumption. The metal plays a critical role in solar panel manufacturing and electrical system components.
Platinum declined 2.9% across the week but posted a 2.1% Friday gain to approximately $2,016 per ounce.
Expert Market Analysis
Nicholas Frappell, who serves as global head of institutional markets at ABC Refinery, informed Reuters that gold successfully maintained crucial technical support thresholds on a weekly timeframe.
He suggested gold could stage a recovery toward the $4,800 level where it previously broke down. Frappell also observed that market participants had adopted selling positions rather than accumulation strategies following gold’s disappointing performance throughout the conflict period.
Spot gold has now retreated more than 10% since the February 28 U.S.-Israel strike on Iran commenced.
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