TLDR
- Gold futures plummeted 7% on Monday, eliminating 2026’s entire price appreciation
- Spot gold retreated to approximately $4,288/oz — marking the steepest weekly decline in over four decades
- President Trump issued a 48-hour ultimatum to Iran regarding the Strait of Hormuz
- Surging crude oil prices stemming from Middle East tensions are intensifying inflation concerns and diminishing rate reduction prospects
- Silver and platinum experienced significant losses; ECB and BoE hinted at potential interest rate increases
The precious metals market experienced severe turbulence this week, with gold suffering substantial losses as escalating tensions between the US, Israel, and Iran propel crude oil prices upward and amplify concerns about persistent inflation.
The spot price for gold retreated to approximately $4,288 per troy ounce during Monday’s session. This represents a decline exceeding 10% over the previous week — marking the metal’s most severe seven-day performance since the early 1980s.
Gold futures contracts declined roughly 7% during morning trading on Monday. These substantial losses have completely wiped out the metal’s year-to-date appreciation for 2026.
Gold entered the current year riding considerable upward momentum. The yellow metal had delivered an extraordinary 65% return throughout 2025. However, the expanding military conflict in the Middle East has rapidly altered market dynamics.
The primary catalyst behind the selloff centers on inflation dynamics. Escalating petroleum prices, triggered by the regional conflict, are generating widespread concern that monetary authorities will maintain elevated borrowing costs — or potentially increase them further.
The Inflation-Gold Connection Explained
Gold generates no yield or dividend payments. When borrowing costs remain elevated or trend higher, market participants generally gravitate toward income-producing instruments. This dynamic diminishes gold’s relative appeal.
The US dollar has simultaneously appreciated, creating additional downward pressure on precious metal valuations. A robust greenback increases the cost of gold for international purchasers operating in alternative currencies.
According to Greg Shearer, who leads base and precious metals strategy at JPMorgan, the decline represents “an extremely brutal flush.” He characterized the movement as part of a widespread “sell everything” phenomenon rather than targeted liquidation of gold positions specifically.
The European Central Bank and Bank of England have both indicated they’re considering interest rate increases during the current year. While the Federal Reserve hasn’t communicated plans for rate hikes, market pricing has systematically eliminated expectations for any 2025 rate reductions.
Analysts at OCBC noted the market is “trading less on geopolitical hedging flows and more on fears that stickier inflation could prompt a more hawkish central bank stance.”
Presidential Ultimatum Escalates Tensions
During the weekend, President Trump delivered a 48-hour ultimatum to Iranian leadership regarding the reopening of the Strait of Hormuz, warning of plans to “obliterate” vital energy infrastructure should Tehran decline compliance.
🚨 “If Iran doesn’t FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST…” – President DONALD J. TRUMP pic.twitter.com/htLz1A0Mf7
— The White House (@WhiteHouse) March 22, 2026
Tehran responded with countertheats, warning of potential strikes against energy production facilities and water infrastructure throughout the Middle East, alongside threats to completely blockade the strategic waterway.
The military confrontation between Israel and Iran has now stretched into its fourth consecutive week. Any further escalation could drive petroleum prices substantially higher, compounding existing inflation anxieties.
Despite heightened geopolitical uncertainty, gold has failed to capture traditional safe-haven investment flows. Instead, inflation-related concerns have overwhelmed trader psychology.
Broader precious metals weakness extended across the sector. Silver declined 2.7% to reach $65.90 per ounce. Platinum retreated 3.9% to $1,850 per ounce. Copper prices similarly experienced sharp reductions.
Ewa Manthey, commodities strategist at ING, observed that during periods of market stress, gold’s exceptional liquidity can transform it into a funding source — meaning market participants liquidate holdings to offset losses in other portfolio positions.
Despite near-term weakness, JPMorgan analysts maintain a constructive long-term outlook on gold. They indicated that should energy supply disruptions persist and economic growth suffer, “the backdrop for gold will likely quickly flip materially bullish.”
As of Monday morning, spot gold was changing hands at its weakest valuation since late December.
