Gold and silver prices tumbled sharply in U.S. trading on Tuesday, pressured by a surging U.S. dollar and rising Treasury yields, even as geopolitical tensions in the Middle East intensified and global markets slid.
April gold futures were last down $190.60 at $5,120.80 after earlier plunging more than $200 on the session. March silver fell $5.70 to $82.60. The pullback came as the U.S. dollar index powered to a nine-month high and the benchmark 10-year Treasury yield climbed toward 4.0%–4.1%, undercutting precious metals despite heightened investor anxiety. The day’s price action underscores a growing tug-of-war in global markets: safe-haven demand driven by war and inflation fears versus the headwind of higher yields and a stronger dollar.
The latest leg of volatility follows dramatic developments in the Middle East. In the pre-dawn hours of February 28, coordinated U.S. and Israeli airstrikes codenamed Operation Roaring Lion and Operation Epic Fury targeted Iranian military and nuclear-linked facilities. Iranian state media confirmed the death of Supreme Leader Ayatollah Ali Khamenei, triggering retaliatory missile and drone attacks across the region.
Iran has launched new missile waves targeting U.S. interests in Qatar, Bahrain, and Oman, while two drones struck the U.S. embassy in Riyadh. Tehran has also threatened to attack any ship entering the Strait of Hormuz and claims the vital waterway is closed to shipping, an assertion denied by the United States.
China has urged “all sides” to safeguard navigation through the Strait, through which roughly 20–30% of global seaborne oil flows. Meanwhile, Europe’s natural gas futures have surged nearly 40% in a single day, reaching their highest levels since 2023 after QatarEnergy halted LNG production following Iranian drone strikes on key facilities. The disruption could impact about 15% of Europe’s LNG imports at a time when EU gas storage sits at just 31%, well below last year’s levels.
Oil prices have climbed sharply, with Nymex crude hitting a nine-month high near $76.50 a barrel. Oil producers, however, have reportedly rushed to hedge future output at current elevated prices, suggesting some in the industry doubt the sustainability of the spike. Global equity markets have fallen, and investor anxiety is mounting. Analysts warn that Iran may be attempting to exhaust U.S. and Israeli air defense systems by deploying low-cost drones against expensive interceptor missiles. This strategy could prolong the conflict. Marion Messmer of Chatham House noted that the U.S. has been purchasing fewer interceptor missiles annually than it has been using, potentially exposing vulnerabilities.
A global survey of economists by Bloomberg indicates the war is likely to rekindle inflation pressures worldwide, primarily via higher oil and gas prices and knock-on effects such as increased transportation and distribution costs. While most respondents expect limited immediate impact on GDP in the U.S., the eurozone, or China, much depends on the duration of the conflict.
The oil-inflation-gold feedback loop is now in motion. Rising energy costs boost inflation expectations, which can support gold as a hedge. But if inflation forces central banks, particularly the Federal Reserve, to maintain or even raise rates, higher real yields could cap bullion’s upside.
That dynamic appeared to dominate Tuesday’s session, as rising yields and a firm dollar outweighed safe-haven flows.
The pullback follows a historic rally. Spot gold surged from around $5,100 ahead of the strikes to as high as $5,418 in the days after one of the largest intraday dollar moves on record. The metal had already posted seven consecutive monthly gains, the longest streak since 1973.
Investor flows into gold-backed exchange-traded funds (ETFs) have accelerated dramatically. According to Bank of America data cited by The Kobeissi Letter, global gold funds attracted $6.2 billion in inflows last week, marking the third consecutive week of inflows. Annualized inflows now stand at a record $148 billion, on pace to surpass 2025’s previous high of $101 billion and far exceeding 2020’s pandemic-era totals.
Asian markets, particularly India, are seeing heightened interest in precious metals ETFs. Market participants generally favor gold over silver in periods of geopolitical stress, though some recommend holding both for diversification. Advisors commonly suggest allocating 10–15% of a portfolio to precious metals, with the majority in gold for stability.
Anthony Di Pizio of The Motley Fool notes that gold has soared 64% in 2025 and is already up another 18% in 2026, far outpacing the S&P 500’s modest 1% gain this year. He attributes the surge to inflation hedging, political uncertainty, and concerns over ballooning U.S. deficits, which reached $1.8 trillion in fiscal 2025 and pushed national debt to $38 trillion. Prominent investors, including Ray Dalio and Paul Tudor Jones, have advocated allocating up to 15% of portfolios to gold as protection against fiscal instability and currency debasement. Still, Di Pizio cautions that gold’s long-term average annual return of about 8% lags the S&P 500’s 10.7% over the past three decades, underscoring the importance of diversification.
Beyond price volatility, the conflict has exposed logistical strains in the bullion market. Dubai International Airport a major transit hub for gold shipments between London and Asia temporarily suspended commercial flights after regional strikes, forcing traders to reroute consignments. The disruption echoes pandemic-era transport bottlenecks that created pricing dislocations between major trading centers.
Gold trades via two primary pricing mechanisms: the spot market for immediate delivery and the futures market for delivery at a later date. Currently, December futures are among the most actively traded contracts on the CME, reflecting year-end positioning and liquidity dynamics.
For now, gold finds itself caught between two powerful forces. On one side, escalating war, surging energy prices, ETF inflows, and inflation fears bolster its appeal as the ultimate haven. On the other hand, a resurgent U.S. dollar and rising Treasury yields present formidable resistance.
A decisive break above January’s record high of $5,594 could open the door toward the $6,000–$6,500 range cited by major banks. But if yields continue climbing and the dollar strengthens further, bullion may struggle to regain upward momentum. As one analyst observed, gold remains the world’s most sensitive barometer of uncertainty. And with missiles flying, energy markets tightening, and policymakers navigating an inflationary minefield, that uncertainty shows little sign of fading.