Precious Metal Posts Steepest Weekly Decline Since 1983 Amid Iran Conflict
The precious metal is facing additional pressure from growing expectations that the Federal Reserve will maintain current interest rates throughout the year, as chair Jerome Powell warned of increasing inflation.
The precious metal experienced another sharp decline of 3.5% on Friday, closing at $4,488 per ounce and recording an 11% weekly drop that represents the most significant single-week loss witnessed since 1983, as ongoing geopolitical tensions and volatility across the Middle East continue to create market pressure.
Since Feb. 28, when Israel and the US launched their initial strikes against Iran, gold has plummeted more than 15%, wiping out a significant portion of the surge that had propelled prices to the $5,500 threshold in late January and raising questions about its traditional role as a safe haven asset.
According to data from TradingView, the trading week of March 16-20 marked gold's most devastating performance since 1983. The 11% weekly decline marginally exceeded the losses seen during the final week of January, when the metal surged to approximately $5,320 before plunging to $4,650, a collapse that eliminated more than $2 trillion from the precious metal's total market capitalization within a matter of days.
The ongoing conflict involving Iran has also created significant disruptions to international oil transportation, especially through the Strait of Hormuz, raising concerns about an extended energy crisis affecting global markets.
US President Donald Trump indicated on Friday that he is evaluating options to "wind down" American military operations in the Middle East region. Nevertheless, the US has deployed thousands of additional military personnel to the area while aerial bombardments persist.
Simultaneously, market participants are predicting that the US Federal Reserve will keep interest rates unchanged throughout this year, enhancing the attractiveness of bonds and other interest-generating assets compared to gold.
Federal Reserve chair Jerome Powell additionally remarked on Wednesday that elevated energy costs would contribute to rising inflation, particularly in the near term.
Bitcoin has clawed back lost ground on gold this month
Over the trailing 12 months, gold has delivered superior returns compared to Bitcoin (BTC), posting gains of 48.5% while the digital currency has declined 16.5% during the identical period.
However, Bitcoin has demonstrated greater resilience in response to the Iran conflict, climbing more than 11.6% to reach $70,535 since the initial attack on Iran by the US and Israel.