had a dazzling run in 2024 and 2025, rising by over 25 per cent in 2024 and over 60 per cent in 2025.
In the case of silver, prices doubled last year. The Iran war could have been a trigger for the precious metals complex to rise, but it has been a different story.
Over the past month, the yellow and white precious metals have shed 14 per cent and 20 per cent, respectively, of their gains.
There are at least five reasons why gold and silver will head further south this year. One of the first effects of the war has been the surge in energy prices, especially for crude oil, which is trading near $100 a barrel.
According to Morgan Stanley, higher energy prices can lift inflation in the near term, but the real risk is persistence. If oil prices remain elevated long enough to seep into inflation expectations, the Federal Reserve is likely to keep the interest rates higher for longer to curb inflation while seeking to ensure economic growth.
The 1980 & 2011 fall
Over time, inflation can put pressure on debts and deficits, and potentially push long-term treasury yields higher as investors demand more compensation to hold longer-maturity bonds.
Higher yields could lead to higher borrowing costs and become a potential headwind for stock and bond markets alike. This would be the first reason because investors will opt for treasury bonds for higher returns compared to gold.
According to experts, gold surged in 1980 to $711 an ounce on September 22, 1980. Then, economic uncertainty, inflation, and geopolitical tensions drove gold higher as a hedge asset.
The impact of the Iran-Iraq war led to inflation, and the US Fed increased the interest rate to 19-20 per cent. This resulted in gold declining over 450 sessions to $304, a decline of 57.24 per cent.
| Year | Purchaces |
|---|---|
| 2025 | 863.3 |
| 2024 | 1,092.4 |
| 2023 | 1,050.81 |
| 2022 | 1,080.1 |
| 2021 | 450.11 |
- Central bank gold purchases (in tonnes)
In 2011, too, gold soared to nearly $2,000 an ounce on September 5 due to economic growth being affected by the financial crisis in 2008.
With the US showing a recovery in economic growth, gold began its fall. It declined for over 1,100 sessions that lasted till December 2015 to bottom out at $1,049 an ounce.
Rising crude, $
In 1980 and 2011 Inflation could strengthen the dollar, in which most commodities are traded. This will be the second reason why the yellow precious metal will be under downward pressure.
A rise in energy prices will mean that many central banks would prefer to book profits on their gold holdings for different purposes, including spending on defence.
| Week | Inflow | Outflow |
|---|---|---|
| First Week | 3.81 | 6.59 |
| Second week | 2.76 | 3.29 |
| Third week | 0.88 | 5.49 |
- ETFs’ performance in the first 3 weeks of March (in $billion)
- Source: World Gold Council
Polish President Karol Nawrocki had indicated that he would use central bank reserves for buying defence equipment. National Bank of Poland, which has 550 tonnes of gold reserves, was one of the largest buyers of gold – 110 tonnes – in 2025.
According to the World Gold Council (WGC), central banks across the world bought over 2,950 tonnes of gold between 2023 and 2025.
Their purchases were 21 per cent lower last year, though. Other central banks, such as the National Bank of Poland, may offload their gold to meet any emergency needs in view of the war this year.
On the other hand, countries like Turkey are saying that they will tap its $135 billion gold reserves to defend their currencies, such as the lira.
So, the selling of gold from reserves by central banks will be the third reason for the outlook fading for gold.
Fourth, the trend in physically-backed gold exchange-traded funds (ETFs) since the beginning of this year is an eye-opener.
| Year | Inflows | Outflows |
|---|---|---|
| 2026 (As of March) | 50.47 | 34.19 |
| 2025 | 166.93 | 78.19 |
| 2024 | 59.52 | 55.81 |
| 2023 | 36.66 | 51.32 |
| 2022 | 49.91 | 52.79 |
| 2021 | 39.47 | 48.39 |
- ETFs inflows/outflows (in $ billion)
According to WGC data, many investors have exited gold ETFs in the first three weeks of this month. Fund flows have turned negative with outflow thrice than the inflows.
ETF inflows a negative $7.9 billion as of March 20. In 2023, gold ETFs saw investors exiting than investing ($14,664).
The fifth reason is that, probably, gold’s sizzling rally has ended if one were to take into account the commodities super cycle.
In a super cycle, gold will lead the rally, followed by metals, crude oil and then agri commodities. With crude oil rallying now, it signals that gold may not see the rise it witnessed in 2024 and 2025, according to analysts.
Silver toes gold
Silver tends to follow gold, and any decline in the yellow precious metal will drag the white precious metal too. The white precious metal, in physical deficit for the eighth consecutive year, tends to rise or drop more sharply than gold. Since November 2025, silver outperformed gold, topping $100 an ounce. However, its fall has also been steep, dropping below $70 an ounce in no time.
Data show that fund managers are making smart moves. Some fund managers have been net long to the tune of $19.2 billion since mid-2023. Last week, they bought over 25,000 cotton contracts. These are pointers to why the precious metals complex is getting the other end of the stick now.
In 1980 and 2011, gold declined by over 40 per cent. This year, after having soared to record highs, gold futures have dropped by over 25 per cent and silver by over 50 per cent. How much more will the fall be, or where the precious metals complex finds its bottom, is a mystery, going by its behaviour over the past two years.