Gold prices have suffered their most severe weekly decline in over four decades, plummeting 11% in the week ending March 20, 2026. This marks the precious metal's worst weekly performance since 1983, with prices falling to $4,488 per ounce on Friday alone, a drop of 3.5%. Since the US and Israel's initial attack on Iran on February 28, gold has declined more than 15%, erasing a significant portion of its rally that had pushed it near $5,500 in late January.
The dramatic sell-off is primarily driven by escalating geopolitical tensions in the Middle East. Reports indicate the United States is deploying thousands of additional Marines and Sailors to the region, which has strengthened the US dollar and Treasury yields. A stronger dollar typically reduces the appeal of dollar-denominated assets like gold for holders of other currencies. Furthermore, the conflict has led to a sustained Iranian blockade of the Strait of Hormuz, disrupting global oil flows and raising fears of a prolonged energy crisis and inflation.
Analysts note a shifting dynamic for gold's traditional role as a safe haven. "Recently, there has been an inverse correlation between oil prices and the price of gold. This is because rising oil prices make interest rate cuts by the US Federal Reserve less likely," said Carsten Fritsch, commodity analyst at Commerzbank AG. Federal Reserve Chair Jerome Powell reinforced this view, stating that higher energy prices would push up inflation in the short term, supporting the case for maintaining higher interest rates. This environment makes yield-bearing investments like bonds more attractive than non-yielding gold, leading to significant outflows from gold ETFs.
Meanwhile, oil prices have moved in the opposite direction, rising on fears of further supply disruptions. West Texas Intermediate (WTI) crude traded at $96.53 per barrel, up 1.2%, while Brent crude reached $109.27, up 0.6%. The market remains volatile, with prices having dropped over 1% earlier on Friday following US announcements regarding steps to address the oil supply crisis.
In a contrasting performance, Bitcoin has shown resilience amidst the turmoil, climbing more than 11.6% to $70,535 since the conflict began, partially reclaiming ground lost to gold over the past year.
