By Kimberley Kao

The precious metals safe-haven trade is crumbling, with gold and silver extend losing streaks as the Middle East conflict fuels anxiety about a lasting oil price shock.

Gold is typically a shelter for investors during geopolitical storms, but that doesn't seem to be holding true this time around.

The yellow metal's initial rally after the Iran crisis began was textbook move, but momentum proved fleeting, said Matt Bance at T. Rowe Price. Markets have reframed their view of the conflict: Rather than a sustained geopolitical shock, investors are treating it more as an energy-driven inflation event, said Bance, a solutions strategist and portfolio manager.

A rise in global bond yields, a firmer greenback and fading expectations for monetary easing are further pressuring gold, as all three factors tend to weigh on the non interest-bearing asset.

Those conditions were out in force on Monday, and spot gold dropped 6.5% to $4,100.04 a troy ounce, its lowest level since December according to ICE data, erasing all gains so far this year. Spot silver fell nearly 9% to $61.92 a troy ounce.

Last week, a slew of central bank decisions sent hawkish signals, pressuring precious metals. This week, fresh rhetoric between the U.S. and Iran fanned expectations of a longer-lasting conflict that could necessitate monetary tightening to curb inflation risk.

In a Truth Social Post on Sunday, President Trump issued a 48-hour ultimatum to Iran to fully open the Strait of Hormuz--a key energy shipping lane--and Tehran has warned that it would respond in kind.

While geopolitical tensions continue to underpin gold, recent price action shows that's not enough on to sustain the rally, said ING commodities strategist Ewa Manthey in a recent note, as higher energy prices overshadow safe-haven demand.

T. Rowe's Bance notes that gold performed strongly coming into the start of the conflict, limiting the scope for fresh haven inflows.

"Investors have used the volatility to take profits and reduce exposure across previously strong-performing assets," he said.

In Asia, the selloff rippled through gold-related stocks. In Hong Kong, Laopu Gold closed 8.6% lower, making it the biggest decliner on the Hang Seng Index. Zijin Gold International lost 3.5% and Chifeng Jilong Gold Mining dropped 25%.

In Australia, miners Northern Star Resources, Evolution Mining and Newmont Corp. lost 7.0%, 7.3% and 7.45% respectively.

With uncertainty high and markets wondering how long the conflict will last, it is hard to gauge where gold will go to next.

Technical analysis suggests further weakness is possible after gold broke below key support levels last week, when it suffered its largest one-week drop since 1983, Quek Ser Leang at UOB Global Economics & Markets Research said in a report.

From a technical perspective, gold has entered a medium-term bearish consolidation below $4,140 an ounce, said Ipek Ozkardeskaya at Swissquote. A break below that level could signal a deeper correction, she wrote in a note.

A sharp enough decline could draw bargain-hunters, especially as fundamental support from factors like geopolitical risks and central bank buying continue.

"Any deeper pullback would likely attract buyers, particularly from central banks and longer-term investors," with future price direction depending more on how geopolitical developments shape inflation and monetary policy, said Manthey at ING.

Write to Kimberley Kao at kimberley.kao@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com

(END) Dow Jones Newswires

March 23, 2026 04:23 ET (08:23 GMT)

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