Key Highlights
- Precious metals experienced severe losses Thursday, with gold futures declining over 7% to reach $4,558 per ounce and silver plunging more than 9%.
- The Federal Reserve maintained its benchmark interest rate in the 3.5%–3.75% range and indicated reduced expectations for future rate reductions amid persistent inflation.
- Iranian forces retaliated with attacks on energy facilities across the Middle East following Israeli military action against the South Pars natural gas complex.
- Major mining companies saw significant premarket losses, with Freeport-McMoRan, Newmont, and Royal Gold all posting declines.
- Market participants have adjusted expectations, now anticipating no Federal Reserve rate reductions before September, strengthening the dollar and weighing on gold values.
Thursday witnessed one of the most dramatic single-session declines for gold in recent history, as market participants navigated between the prospect of sustained elevated interest rates and an expanding military confrontation in the Middle East involving Iran and Israel.
BREAKING: Spot gold extends its selloff to -$400/oz on the day, now trading at $4,500/oz for the first time since February 2nd. pic.twitter.com/ARqkGaABpz
— The Kobeissi Letter (@KobeissiLetter) March 19, 2026
Early trading saw continuous gold futures decline more than 7% to settle at $4,558 per ounce, representing a $289 decrease. By 8:36 AM ET, spot gold had fallen 4.3% to trade at $4,609.02 per ounce. Silver markets experienced even steeper losses, with futures dropping 9.3% and spot prices tumbling 11% to $67.17 per ounce.
This sharp decline sent gold prices substantially below the $5,000-per-ounce threshold that had been maintained for approximately one month.
Federal Reserve Maintains Current Policy Stance
During Wednesday’s policy meeting, the Federal Reserve opted to keep interest rates steady within the current 3.5%–3.75% band. Federal Reserve Chair Jerome Powell highlighted increasing inflationary pressures and indicated the central bank would demonstrate “a meaningful amount of movement toward fewer cuts.”
Wednesday’s release of robust U.S. producer inflation figures intensified concerns. Financial markets recalibrated their forecasts, with CME FedWatch data indicating rate cut expectations now delayed until September at the earliest.
As a non-interest-bearing asset, gold typically becomes less attractive during periods of elevated interest rates. Capital tends to flow toward yield-generating investments in such environments.
“The timeline for Fed rate cuts has been extended,” explained Adrian Ash, a researcher with BullionVault. “From a mechanical standpoint, this creates headwinds for gold.”
While Ash characterized the current environment as a “test” for the precious metal, he refrained from declaring the current level as a definitive floor.
Iranian Retaliation Shakes Energy Sector
The precious metals selloff coincided with substantial gains in crude oil markets. Brent crude futures surged 6.3% following overnight Iranian military strikes targeting critical energy infrastructure throughout the Middle East.
Tensions escalated significantly after Israeli forces conducted an offensive against South Pars, recognized as the planet’s largest natural gas reserve. Iran’s response included coordinated strikes on numerous energy installations across the region, while maintaining ongoing operations against Israeli positions.
The Strait of Hormuz, a vital conduit for international oil and natural gas transportation, has been essentially shut down, creating additional upward momentum for energy commodity prices.
Elevated crude oil prices contribute to inflation concerns, which diminishes prospects for immediate Federal Reserve rate cuts.
In a client note, OCBC analysts observed: “The market is effectively trading less on geopolitical hedging demand and more on the worries of higher inflation risks delaying Fed cut trajectory.”
The analysts noted that safe-haven demand for gold is “being offset by the drag from rising real yields.”
Equity shares of precious metal mining operators also declined during premarket sessions. Freeport-McMoRan registered a 4.4% decrease, Newmont shed 7.6%, and Royal Gold posted a 4.6% decline.
The U.S. dollar gained strength amid the prolonged elevated rate environment, creating additional pressure on gold, which is denominated in the American currency.
According to CME FedWatch data, market participants are now pricing in zero probability of rate reductions before September, representing a notable pushback from earlier projections.
