NEW YORK: Gold has fallen sharply and is close to wiping out this year’s gains, as the war in the Middle East enters its fourth week and the United States and Iran trade threats of new attacks.
Bullion plunged as much as 3.8% to US$4,320.30 an ounce – less than a dollar above where it ended last year.
Since the conflict began, surging oil prices have raised inflationary risks and reduced prospects for near-term interest-rate cuts by the US Federal Reserve and other central banks. This is a headwind for non-yielding gold, which has fallen for eight consecutive sessions and just posted its biggest weekly drop since 1983.
Gold’s choppy opening mirrored the broader market, with crude fluctuating near the highest close since mid-2022 and equity markets also volatile.
In the three weeks since the war began on Feb 28, bullion’s decline has been driven partly by forced selling as investors seek to cover losses elsewhere in their portfolios.
The metal ended last year at US$4,319.37 an ounce.
“The magnitude of gold’s sell-off is not unprecedented, but the pace of the sell-off has been much quicker than on many historical occasions,” said Wayne Gordon, an investment adviser at the wealth-management unit of UBS Group AG.
Over the weekend, US President Donald Trump gave Iran a two-day deadline to reopen the Strait of Hormuz or have its power plants bombed. Iran countered that it would close the strategic waterway “completely” if its power facilities come under attack. — Bloomberg
