Gold set for worst week in 6 years as Iran war curbs rate-cut bets
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Bullion traded near US$4,640 an ounce on March 20, down almost 8 per cent this week, the most since March 2020.
PHOTO: REUTERS
Singapore – Gold headed for the biggest weekly loss in six years, as the war in the Middle East lifted energy prices and reduced expectations for rate cuts.
Bullion traded near US$4,685 an ounce on March 20, down almost 7 per cent this week, the most since March 2020. Soaring crude and gas prices triggered by the conflict are raising inflation concerns, reducing the prospects of central banks lowering borrowing costs. That is a headwind for gold, which does not pay interest.
The precious metal – widely viewed as a haven asset – has dropped every week since the US and Israel attacked Iran on Feb 28. The retreat has come as Treasury yields and the US dollar gained ground, investors sold bullion to cover losses elsewhere, and gold-backed exchange-traded funds posted outflows.
“Do not buy the dip – there’s way too much volatility,” said Mr Robert Gottlieb, a former precious-metals trader at JPMorgan Chase & Co and now an independent market commentator. “Until the volatility starts to decrease and prices start to consolidate”, there may be more selling, he added.
The US Federal Reserve met midweek to assess policy, opting to leave rates unchanged as widely expected. Chairman Jerome Powell emphasised that to resume easing, officials would have to see progress in reducing inflation.
Gold’s performance since the Iran war broke out echoes a decline in 2022, when Russia’s invasion of Ukraine caused an energy shock that rippled through global markets. That year, bullion posted a seven-month run of losses until October, the longest such streak on record.
Bullion-backed ETFs are set for a third week of outflows, with holdings dropping more than 60 tons in that period, data compiled by Bloomberg showed.
Despite the recent pullback, gold remains about 8 per cent in 2026. Prices had touched a record just below US$5,600 an ounce in late January, supported by a wave of investor enthusiasm, central-bank buying, and concerns over threats to the Fed’s independence posed by US President Donald Trump.
Gold added 0.8 per cent to US$4,686.62 an ounce at 10.16am in Singapore, after capping a seven-day losing run on March 19, the longest since October 2023.
In other precious metals, silver advanced 1.4 per cent to US$73.87 an ounce, but is still down by more than 8 per cent this week. Palladium and platinum also headed for weekly losses. BLOOMBERG
