Gold’s sharp drop sparks surge in first-time buyers in Singapore

SINGAPORE - Gold prices fell as much as 4 per cent on April 2, shortly after US President Donald Trump delivered his first major national address on the Iran war since it began on Feb 28, at 9am Singapore time.

Spot gold was trading around US$4,695 an ounce as at 2pm. Before the war started, gold had been trading at US$5,278 an ounce.

Normally, the price of gold – a traditional safe-haven asset – rises when global tensions flare. But during the latest Middle East conflict, prices have staged one of the steepest drops in decades, prompting investors – many of them trading gold for the first time – to enter the market.

Over the five weeks since the crisis, gold has continued to slide. After a record-breaking 65 per cent return in 2025, the price of gold fell more than 10 per cent during a single week in late March 2026. This decline nearly surpassed any weekly loss seen during the 2008 financial crisis, the dot.com crash and the Covid-19 pandemic. 

Despite having surged about 25 per cent in the first two months of 2026, the metal fell in tandem with other assets, defying its reputation as a crisis hedge.

“As equities softened, yields pushed higher and currencies realigned, gold became the asset of first resort for liquidity. It was sold not because it failed as a safe haven, but because it succeeded as collateral,” said Mr Stephen Innes, managing partner of SPI Asset Management.

The Central Bank of Turkey was the single largest source of gold selling since the Iran war escalated. It sold nearly 60 tonnes of gold, a move worth more than US$8 billion (S$10.3 billion) as Turkey tries to control inflation by keeping its lira stable.

OCBC Bank said gold’s earlier rally was driven in part by heavy central bank buying, as countries such as China and other emerging markets sought to diversify from the US dollar. But that demand has faded in recent months.

With oil-importing nations now struggling with persistently high energy costs, their ability to keep building gold reserves has diminished, thus removing buyers from the market and adding to the downward pressure.

The biggest shift came from the broader economy. The regional war has driven up oil and commodity prices, reviving inflation worries.

In response, investors have trimmed expectations of interest rate cuts, with some now anticipating that the US Federal Reserve might hike rates to fight inflation.

This results in higher real yields and a stronger US dollar – two forces that traditionally are negative for gold prices.

Since gold pays no interest, rising yields make holding it less attractive, and cash and bonds more appealing. As gold is priced in US dollars, a stronger greenback makes it more expensive for buyers outside the US, too.

Ms Germaine Tan, OCBC’s head of treasury products and equities, said it was common for gold to face short-term selling during periods of stress as investors raise liquidity. 

“What is notable this time is that despite the price correction, investor participation has increased, suggesting confidence in gold’s longer-term role as a portfolio hedge remains intact. Price pullbacks can present attractive entry points to build exposure gradually,” Ms Tan said.

The sharp drop in gold prices has prompted a surge of first-time retail buyers seeking to build exposure to the precious metal.

Gold transactions among OCBC’s customers jumped 60 per cent in the four weeks following Feb 28 – the day the US and Israel launched joint military strikes against Iran – compared with the preceding four weeks. The latest activity is also seven times higher than a year ago, OCBC said on March 31.

New entrants now account for 7 per cent of the bank’s total precious metals investor base.

“OCBC’s data suggests that investors are not turning away from gold and are, in fact, taking advantage of lower prices to build exposure, particularly those who had previously stayed on the sidelines when prices were stretched,” the bank said.

Mr Innes said for now, the dollar has overtaken gold as the preferred safe haven asset, but gold’s long-term appeal has not disappeared – just interrupted. 

Mr Alejandro Bondavalli, senior investment manager at Pictet Wealth Management, agrees that the long-term case for gold remains intact.

“We view the recent pullback as an opportunity to adjust strategic exposure and tactically position for a recovery.

“Should the Iran conflict stabilise, oil prices may fall, and higher rate expectations could diminish. In an adverse scenario, the risk of a global recession would increase, and central banks may be forced to cut interest rates,” Mr Bondavalli said.