Gold prices pulled back sharply in early European trading on Thursday, retreating from recent highs as escalating geopolitical tensions and surging oil prices shifted investor sentiment.
Futures in New York dropped nearly 4% to $4,619.30 per troy ounce, while other precious metals also saw steep declines. Silver tumbled 7.3% to $70.54 an ounce, and platinum fell 4.6% to $1,896.70 an ounce.
The downturn follows renewed concerns over a potential conflict between the United States and Iran after President Donald Trump warned that the U.S. could strike Iran “extremely hard” in the coming weeks. The rhetoric has driven oil prices higher, fueling fears of rising inflation.
Higher inflation expectations are now complicating the outlook for interest-rate cuts by central banks, a key factor that typically supports gold prices. As rate-cut optimism fades, gold’s appeal as a non-yielding asset has weakened despite its traditional role as a safe haven during geopolitical uncertainty.
However, the broader trend remains resilient. Gold is still on track for a weekly gain of more than 5%, supported by earlier optimism after Trump suggested the U.S. might step back from confrontation within two to three weeks.
Frequently Asked Questions
Why did gold prices fall despite geopolitical tensions?
Gold typically rises during uncertainty, but this time, rising oil prices increased inflation fears. That reduced expectations of interest-rate cuts, which hurt gold’s appeal as a non-yielding asset.
How do higher oil prices impact gold?
Higher oil prices can drive inflation. When inflation rises, central banks may keep interest rates higher for longer—making interest-bearing assets more attractive than gold.
Why did silver and platinum fall more than gold?
Silver and platinum are more tied to industrial demand. Concerns about economic slowdown and volatility often hit these metals harder than gold.
Is gold still in an uptrend despite the drop?
Yes. Despite the recent dip, gold is still on track for a weekly gain of over 5%, supported by earlier bullish momentum.
What should investors watch next?
Key factors include developments in U.S.–Iran tensions, oil price movements, and signals from central banks about future interest-rate decisions.
