Gold Plunges Over 2% as US-Iran Tensions Trigger Worst Weekly Drop in Decades

• Gold fell to $4,489, down 3.5% on the day and nearly 18.5% from its February peak of $5,627.
• The selloff defied safe-haven trends as prior rallies had already priced in geopolitical risks.
• Central banks held rates steady but signaled possible tightening amid rising inflation concerns.

Gold tumbled more than 2% on Friday, heading for its steepest weekly decline in over four decades. The escalating hostilities between the United States and Iran drove oil prices sharply higher, rekindling fears of a Federal Reserve interest rate hike that would undercut demand for the non-yielding metal.

Spot gold fell to $4,489 per troy ounce, down 3.5% on the day and roughly 14% below its level a month ago. The metal has shed 18.5% since touching a record $5,627 in late February. Silver fared worse, sliding more than 4% to $70.97 — its seventh straight session of losses and the longest streak since December 2023.

Safe-Haven Logic Breaks Down

The selloff defied the conventional logic that geopolitical turmoil drives investors toward safe-haven assets. Analysts pointed to compounding forces. First, precious metals entered the conflict having already priced in substantial risk premiums after gold’s 66% surge in 2025 and silver’s rally of more than 130%. When war arrived, there was little fear premium left to add.

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Central Banks Hold, But Hawks Circle

The Federal Reserve, European Central Bank, Bank of England, and Bank of Japan all held rates steady this week but signalled readiness to tighten further if inflationary pressures persist. Reports that the Pentagon is deploying three warships and several thousand Marines to the region added to the sense that the conflict could prove protracted.

Despite the near-term pressure, macro models project gold recovering to $5,042 per ounce by end of the second quarter and to $5,458 within twelve months, implying the current drawdown is viewed as a sentiment-driven dislocation rather than a structural shift in the metal’s long-term trajectory.

One analyst said that there is still at least a 50% chance gold dips below $4,381 even after a short-term bounce. 

Source: X

If that level fails, they expect a deeper decline toward $3,900 and possibly as low as $3,400, despite skepticism from others who doubt such a sharp drop.

Gold futures for April delivery settled at $4,570, down $92.40 or 1.98%. The S&P 500 shed 1.57%, while Brent crude added 3.1% to trade above $103 a barrel.

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