Gold Prices Drop Despite Rising Geopolitical Tensions
Gold prices declined sharply during Asian trading on Monday, as rising concerns over inflation and higher interest rates weakened safe-haven demand—even as the U.S.-Israel conflict with Iran continued to escalate.
The latest drop has effectively erased most of gold’s gains for 2026, signaling a shift in market dynamics.
Gold Hits Multi-Month Lows
Spot gold fell 4.6% to $4,287.05 per ounce, while gold futures dropped 6.1% to $4,323.31. The decline pushed spot prices to their lowest level since late December.
Other precious metals also came under pressure. Silver fell 2.7% to $65.90 per ounce, while platinum declined 3.9% to $1,850.81, reflecting broader weakness across the sector.
Trump Issues 48-Hour Deadline to Iran
Over the weekend, President Donald Trump issued a 48-hour ultimatum demanding that Iran reopen the Strait of Hormuz, warning of potential U.S. strikes on key energy infrastructure if the deadline is not met.
Iran responded by threatening retaliation, including attacks on critical energy and water infrastructure across the Middle East, as well as a complete closure of the strategic shipping route.
With the conflict now entering its fourth consecutive week, tensions remain elevated, increasing the risk of further escalation.
Gold Fails to Benefit from Safe-Haven Demand
Despite heightened geopolitical risks, gold has struggled to attract traditional safe-haven inflows. Instead, macroeconomic concerns have taken center stage.
Inflation and Rate Fears Weigh on Gold
The primary pressure on gold prices has come from rising inflation expectations linked to the ongoing conflict. Higher energy prices are fueling concerns that central banks may adopt a more aggressive, hawkish stance.
Recent signals from the European Central Bank and the Bank of England point toward potential interest rate hikes, while markets are increasingly scaling back expectations for rate cuts from the Federal Reserve.
According to analysts at OCBC, market focus has shifted away from geopolitical hedging toward concerns that persistent inflation could lead to tighter monetary policy.
Outlook: Long-Term Support Still Intact
Despite the recent downturn, analysts believe that gold’s long-term fundamentals remain supportive. While short-term pressures persist, the broader outlook suggests that prices could recover as macroeconomic conditions evolve.
