Gold experiences significant weekly drop amid Iran war and economic factors, raising questions about its safe-haven status.
Gold prices dropped 3.5% to $4,488 per ounce on Friday, resulting in an 11% weekly decline, the biggest since 1983, as geopolitical tensions in the Middle East persist.
The precious metal has fallen more than 15% since February 28, when the U.S. and Israel launched attacks on Iran, erasing gains that had pushed prices to $5,500 in late January.
Trading data confirms March 16-20 as gold's worst week in 41 years, with the drop slightly exceeding a previous decline in late January that saw prices fall from $5,320 to $4,650.
Impact of Geopolitical and Economic Factors
The Iran conflict is disrupting global oil flows, particularly in the Strait of Hormuz, heightening fears of an energy crisis. U.S. President Donald Trump stated on Friday that he is considering winding down military efforts in the region, though the U.S. has deployed additional troops amid ongoing airstrikes.
Simultaneously, traders anticipate the U.S. Federal Reserve will maintain current interest rates this year, making bonds more attractive than gold. Federal Reserve Chair Jerome Powell noted on Wednesday that higher energy prices could increase inflation in the short term.
Bitcoin has outperformed gold recently, rising 11.6% to $70,535 since the initial attacks on Iran, while gold has lost ground over the past 12 months despite earlier gains.
Over the last year, gold increased 48.5%, but recent events have shifted investor preferences, with cryptocurrencies showing resilience amid the same pressures.
