Gold prices tumbled sharply on the last trading day of the week, plummeting by 3.5% to $4,488 per ounce. This dramatic slide brought the precious metal’s weekly decline to a staggering 11%, marking the steepest weekly drop witnessed since 1983.
Wave of Heavy Selling Hits Gold Market
Since February 28, gold has lost over 15% of its value. The initial sell-off took hold following the first U.S. and Israeli strikes against Iran and continued to snowball, dragging prices far below the late-January peak of $5,500 per ounce.
The third week of March ultimately proved to be the weakest period for gold in more than four decades. While gold reached as high as $5,320 by the end of January, a swift descent to $4,650 not only erased those gains but also resulted in trillions of dollars vanishing from the market’s overall capitalization.
Geopolitical Tensions and Rate Expectations Squeeze Gold
Rising tensions in the Middle East, especially ongoing clashes involving Iran, have further rattled energy supplies, disrupting oil flows through the Strait of Hormuz and stirring fresh uncertainties in global energy markets. These developments have contributed to volatility across financial markets, putting added pressure on gold.
U.S. President Donald Trump stated that plans are underway to scale back certain military operations in the Middle East. However, the continued deployment of additional troops and ongoing airstrikes in the region indicate that risks remain very much on the table.
Meanwhile, market participants are increasingly convinced that the U.S. Federal Reserve will keep interest rates steady through the rest of the year. This expectation, paired with the growing appeal of yield-bearing assets like bonds, has diminished gold’s attraction, as gold does not offer any returns.
Jerome Powell, Chairman of the Federal Reserve, noted that surging energy prices may put upward pressure on inflation in the near term. This dynamic could potentially prompt a shift in monetary policy outlooks as central bankers weigh their next moves.
Bitcoin Regains Strength Against Gold
Over the past twelve months, gold had surged 48.5% while Bitcoin declined by 16.5%. Nevertheless, the gap between the two assets’ performances has narrowed significantly in recent weeks, drawing keen attention from market watchers.
Following heightened tensions involving Iran, Bitcoin prices jumped 11.6% to reach $70,535. This surge demonstrated that, at least in the short term, digital assets like Bitcoin responded more swiftly than gold to geopolitical risks.
The sharp sell-off in gold alongside Bitcoin’s recent rebound is forcing investors to reconsider their perceptions of so-called “safe haven” assets. These shifting trends highlight how evolving risk sentiment is now being reflected in the diverging trajectories of traditional and digital markets.
