By Mackenzie Tatananni and Alex Kozul-Wright

The price of gold tumbled on Thursday as flaring tensions in the Middle East drove oil prices higher and dimmed the prospects of a near-term rate cut by the Federal Reserve.

Continuous gold futures closed down 5.9% at $4,605.70 an ounce. The price of the precious metal has dropped by more than $1,000 since hitting an all-time trading record of $5,626.80 per ounce on Jan. 29.

Silver futures fared even worse, falling 8.2% to $71.22 on Thursday. Silver has fallen for seven straight days, marking the longest losing streak since a eight-day stretch in December 2023.

Elsewhere, Brent crude futures, the international benchmark, settled up 1.2% at $108.65 after Iran struck key energy infrastructure across the Middle East overnight.

Amid the slump, Gavekal analyst Will Denyer remarked Thursday that gold looked increasingly vulnerable to a major correction.

"The yellow metal has had an extraordinary run, rising from just under US$2,000 per troy ounce on Valentine's Day, February 14, 2024 to just under US$5,000 today, a little more than two years later," Denyer wrote.

Denyer noted that widespread monetary easing since 2024, formerly a "key driver of the rally," had been eliminated with the latest Fed decision. The central bank held interest rates steady on Wednesday as chair Jerome Powell said inflation risks point to "a meaningful amount of movement toward fewer cuts."

Adrian Ash, a researcher at online marketplace BullionVault, says the rate decision could have an adverse effect on the yellow metal. "Fed rate cuts have been pushed out further in the future," Ash told Barron's in an interview. "Mechanically, that would be bad for gold."

Higher-for-longer interest rates would almost certainly be a headwind for gold, which doesn't pay interest -- the yellow metal would likely shed demand in favor of assets that do.

Gold faces a "test" moment, Ash continued, as central banks have continued to build out their bullion reserves. The researcher stopped short of calling a price trough, as "gold is continuing to see competition from buy and sell pressures."

For now, multiple factors could be contributing to gold's recent weakness. Yardeni Research noted in an email to clients Thursday that gold wasn't acting as a safe haven against instability, in an environment with no absence of it.

"There's plenty of geopolitical risk today, along with higher inflation and larger U.S. federal budget deficits ahead," the firm wrote. "Yet, the price of an ounce of gold is down sharply today."

The slump coincided with growing trepidation that the war in Iran may not be short-lived. Defense Secretary Pete Hegseth announcement Thursday that the Pentagon was seeking an additional $200 billion in funding.

So, what gives? The "always-reliable quick answer," in Yardeni's view, is profit-taking after a meteoric rise. "Perhaps investors in the Middle East are selling gold to buy the U.S. dollar, which has strengthened during the war, even though both are considered safe havens," Yardeni wrote.

Alternatively, investors might be scrambling to offset recent losses in the markets in South Korea and Japan, the firm added. Another possible culprit is rising bond yields. In the case of bond yields and gold, when one goes up, the other usually goes down.

Shares of precious-metal miners were also down sharply on Thursday. Freeport-McMoRan, Newmont and Royal Gold fell 4.7%, 8.7%, and 8.4%, respectively.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com and Alex Kozul-Wright at alexander.kozul-wright@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 19, 2026 15:17 ET (19:17 GMT)

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