Gold is on track for its biggest weekly loss in six years, as the war in the Middle East has pushed energy prices higher and sharply reduced expectations for central bank interest rate cuts. Bullion traded near $4,650 an ounce on Friday, down roughly 7% for the week, the steepest weekly drop since March 2020.
Although gold is traditionally seen as a safe-haven asset during times of geopolitical turmoil, the current conflict has had the opposite effect. Instead of driving sustained haven buying, the war has fueled inflation concerns through higher oil and natural gas prices, weakening the outlook for monetary easing and creating a major headwind for non-yielding assets such as gold.
Gold has now fallen every week since the U.S. and Israel attacked Iran late last month. Normally, escalating conflict in the region would boost safe-haven demand. This time, however, the surge in energy prices has shifted investor focus toward inflation and interest rates. Soaring crude and gas prices have raised fears that inflation will remain stubbornly elevated, forcing central banks to keep borrowing costs higher for longer. Because gold does not pay interest, it tends to struggle when rates and bond yields rise. At the same time, investors have been selling bullion to cover losses elsewhere, while gold-backed exchange-traded funds have also seen outflows. The stronger U.S. dollar has added another layer of pressure, making gold more expensive for international buyers.
The U.S. Federal Reserve reinforced the market’s cautious stance this week by leaving interest rates unchanged, in line with expectations. More importantly for investors, Fed Chair Jerome Powell stressed that officials would need to see further progress on inflation before resuming any rate cuts.
That message has prompted a dramatic repricing in market expectations. Before the start of the Iran war, swaps traders were pricing in 61 basis points of Federal Reserve easing this year. Now, markets expect just 3 basis points of cuts, showing how quickly the inflation outlook has altered the monetary policy picture. Other major central banks are taking a similarly cautious approach. The European Central Bank and the Bank of England also kept rates unchanged this week, signaling that they remain alert to the risk of renewed inflation pressures tied to energy markets and geopolitical instability.
The shift in rate expectations has pushed U.S. Treasury yields higher, compounding the pressure on precious metals. On Friday, the two-year Treasury yield rose four basis points to 3.83%, while the five-year yield gained three basis points to 3.91%. Higher yields increase the opportunity cost of holding gold, while a firmer U.S. dollar further weakens demand. According to James Reilly, senior markets economist at Capital Economics, “The inflation backdrop is growing increasingly problematic for the Fed and rate cuts are not likely anytime soon.”
This combination of rising yields, a stronger dollar, and fading hopes for monetary easing has become the dominant force in the gold market, overwhelming bullion’s traditional safe-haven appeal.
Despite the heavy weekly losses, gold showed some signs of stabilizing on Friday. Spot gold for immediate delivery was little changed at $4,653.11 an ounce in Singapore after ending a seven-day losing streak on Thursday, its longest run of declines since October 2023. In early U.S. trading, April gold futures rose $54.90 to $4,660.60, suggesting some bargain-hunting and short-covering after the sharp selloff. Still, the broader trend remains weak, and the metal is on course for its worst weekly performance in years.
Even with the recent retreat, gold is still about 8% higher for the year, and some analysts believe a temporary price drop could encourage renewed central bank buying.
The weakness has not been limited to gold. Silver traded near $72.74 an ounce, down about 10% this week, while May silver futures rose $0.97 to $72.19 in early U.S. trading on a corrective bounce. Palladium and platinum were also headed for weekly losses. Silver has been especially volatile this year, reflecting both speculative trading and strong physical demand.
One of the more striking developments in the precious metals market is China’s growing appetite for silver. Bloomberg reported that China’s silver imports climbed to an eight-year high in the first two months of 2026, as buyers responded to a surge in both industrial and investment demand.
The world’s largest silver buyer imported more than 790 tons over January and February, including nearly 470 tons in February alone, the highest ever for that month, according to Chinese customs data. Strong domestic demand has pushed local silver prices well above international benchmarks, reduced already-tight exchange stockpiles, and pulled metal into China from overseas markets.
Silver has had one of its most volatile starts to a year on record, surging around 70% on speculative buying from China and other markets before abruptly reversing at the end of January. The latest import figures suggest that, despite the market swings, physical consumption in China remains strong.
The war involving Iran continues to rattle energy and financial markets across the globe. Iran has continued Gulf strikes, while Israel has reportedly vowed to spare energy sites after criticism from Donald Trump. Although crude oil and gas prices later eased somewhat as the U.S. and Israel tried to reassure investors, markets remain deeply unsettled.
Among the latest developments:
These developments underscore why energy prices remain the central market variable. Even if gold usually benefits from uncertainty, a prolonged energy shock risks keeping inflation elevated and monetary policy tight.
For now, gold’s role as a haven asset is being overshadowed by the inflationary consequences of war. Investors are no longer responding to the conflict by simply buying bullion; instead, they are focusing on what higher energy prices mean for central banks, bond yields, and the dollar. As long as oil and gas markets remain under stress, expectations for rate cuts are likely to stay subdued. That means gold may continue to face pressure, even amid geopolitical instability. Unless inflation shows clear signs of easing or energy markets calm significantly, bullion’s near-term outlook is likely to remain challenging.