The dollar index is up nearly 2% since the Iran war began, halting a monthslong slide. The rebound in the dollar could be dampening the appeal of gold.
Safe haven demand, nerves about inflation and the prospect of higher interest rates have all boosted the dollar. It’s another signal from markets that traders are worried about how the Iran war could disrupt the global economy.
- Gold had an enormous rally in recent months, and the hype is taking a breather. Investors could also be selling to pay off losses on other assets.
Momentum is waning after gold surged higher across the past two years.
Gold gained 64% in 2025 and posted its best year since 1979. The metal hit $5,000 a troy ounce for the first time in January.
The hype might be fading … for now. Gold on Friday dipped below $4,500 a troy ounce, erasing its gains across the past two months.
Gold’s meteoric rise in recent months had in part been boosted by retail investors chasing the rally. Gold in recent weeks had been trading more like a meme stock than a safe haven.
“Upward momentum has faded,” strategists at Dutch bank ING
said in a note. “Some investors are selling gold to raise cash or
rebalance portfolios.”
- Massive Weekly Decline: Gold futures for March delivery plunged by $482.10 per ounce, marking the largest single-week dollar decline in history (based on data back to 1975).
- Worst Performance Since 2011/2012: While some sources noted this as the biggest drop since 2011, other reports highlighted it as the worst performance in 12 to 15 years.
- Consecutive Losses: This week marked the third straight week of losses for the metal, with a total drop of over 12% over that period.
- End of Safe-Haven Status: Despite the conflict in the Middle East usually boosting prices, gold lost its luster as a safe haven as investors sold to cover losses elsewhere, or due to a robust US dollar, according to Yahoo Finance.
- Impact on Other Metals: Silver also saw significant losses, recording its third straight losing week with a decline of over 14%.
- Reduced Fed Rate Cut Expectations: High inflation concerns and the changing economic landscape reduced hopes for imminent Federal Reserve rate cuts, driving investors away from gold, as reported in Kitco News.
- Rising Dollar and Yields: The U.S. dollar and bond yields rallied, making dollar-priced gold more expensive for buyers holding other currencies.
- Profit-Taking: The decline followed a major rally in February 2026, which saw gold hit record highs, prompting some investors to liquidate positions.
- Energy Prices: The Middle East conflict led to surging energy prices, creating fears of further inflation, say CNN Business and Bloomberg.
No comments:
Post a Comment