Gold prices dropped over 5% on
Thursday, falling for a seventh consecutive session, as the
Middle East conflict increased energy prices and ignited
inflation concerns, raising expectations that top central banks
will keep borrowing costs elevated.
Spot gold fell 5.5% to $4,552.38 per ounce by 8:46
a.m. ET (1246 GMT), its lowest since early February.
U.S. gold futures for April delivery fell 7% to
$4,554.70.
“Gold is now a very widely held position for institutional
investors and that has been on the back of the debasement trade
over the last year. But the foundations of that trade are now
weakening,” said Daniel Ghali, commodity strategist at TD
Securities.
“For the near term, we continue to see risk to the downside.
There is a very substantial amount of room for gold to sell off
while maintaining its bull market era trend support,” he added.
Gold is prized as a hedge against inflation and geopolitical
turmoil, but because it does not generate interest, it tends to
lose appeal in periods when rates are high.
Top central banks struck hawkish tones as the Iran war drove
energy prices sharply higher but acknowledged the sheer
uncertainty over the impact on the global economy called for
caution in their next policy moves.
Benchmark Brent oil prices traded above $110 a barrel after
Iran attacked energy facilities across the Middle East following
Israel’s strike on its South Pars gas field.
Meanwhile, a U.S. official and three people familiar with
the matter said President Donald Trump’s administration is
considering deploying thousands of U.S. troops to reinforce its
operation in the Middle East as the Iran war enters a possible
new phase.
Analysts at SP Angel said gold has been hit by profit-taking
and a stronger dollar, noting that after its strong rally in
2025, it is not surprising to see traders lock in gains to cover
margin calls and rotate into fresh trades such as hydrocarbons
amid renewed volatility.
Spot silver fell 10.7% to $67.26 per ounce. Spot
platinum fell 6.8% to $1,886.13, and palladium
lost 4.1% to $1,415.41.