Gold prices moved lower on Thursday even as global tensions stayed high. The ongoing war involving the United States, Israel, and Iran created uncertainty across markets. Normally, such events increase safe haven demand for gold. However, US dollar strength and rising Treasury yields pushed the metal down.
Spot gold prices dropped about 1.2% and traded near $5,070 per ounce. The metal stayed in a narrow range during the week. Market watchers expected stronger gains because of the conflict. Instead, gold showed limited movement.
The war began with strikes on Iran on February 28. At first, gold prices jumped sharply. The metal rose from about $5,296 to nearly $5,423 per ounce. Soon after, heavy selling appeared in the market. Prices dropped more than 6% and touched around $5,085 by early March.
Since then, gold traded mostly between $5,050 and $5,200. Analysts linked this pattern to strong moves in currency and bond markets.
A major reason for the fall came from US dollar strength. The dollar climbed to multi month highs this week. A strong dollar makes gold costly for buyers outside the United States. Lower demand from global buyers often pulls gold prices down.
Rising Treasury yields added more pressure. The US 10 year Treasury yield reached around 4.27%. Higher yields attract investors toward bonds. Gold offers no regular return, so investors often move money away from the metal during such periods.
Stock market losses also affected the gold market. The Dow Jones Industrial Average dropped more than 700 points earlier in the week. Some investors sold gold to cover losses in other assets. This selling limited the rise in gold prices.
At the same time, the war pushed oil prices sharply higher. Brent crude jumped above $100 per barrel after attacks on ships in the Persian Gulf. Iran also warned that the Strait of Hormuz would remain closed. Around one fifth of the world’s oil supply normally moves through that route.
Higher oil prices increased fears about global inflation. Rising energy costs often lead to tighter monetary policy. Markets now expect the Federal Reserve to keep interest rates steady at the next meeting. This outlook also supports higher Treasury yields.
Even with the recent drop, many banks still see strong long term potential for gold prices. Large financial institutions expect continued geopolitical risks to support the metal. Some forecasts suggest gold may move close to $6,000 per ounce before the end of the year.
For now, the gold market reacts more to currency strength and bond yields than to war news. Analysts say safe haven demand could return if tensions grow further.
Also Read: MCX Gold Jumps Rs. 1,600 to Rs. 1.63 Lakh, Silver Up 2% Amid US-Iran Tensions