Gold extends losses amid hawkish shift in global market expectations

BERLIN

Gold fell more than 2% per ounce on Monday as escalating military tensions in the Middle East fueled inflation concerns.

The precious metal dropped below $4,400 per ounce as expectations of global interest rate hikes strengthened amid ongoing military clashes in the region, triggered by the joint US and Israeli attacks on Iran on Feb. 28 and Tehran’s subsequent retaliations.

Gold had already lost more than 11% last week and hit its lowest level since Jan. 2 as of Monday.

At the start of 2026, gold stood at $4,321 per ounce and later reached a record high of more than $5,600 on Jan. 29.

US and Israeli attacks on Iran entered the fourth week, while oil prices continued to hover above $100 per barrel, reversing market expectations from rate cuts to rate hikes.

Investor appetite for gold weakened among yield-seeking players, with the metal facing heavy selling pressure over the past two weeks amid the ongoing conflict, while its year-to-date gains narrowed to just $20.

Silver also declined alongside gold, falling more than 3% per ounce and slipping below $65.

Tehran announced it would target energy and water systems in the region in retaliation for threats by US President Donald Trump, pushing market risk sentiment to a peak.

Analysts said the sharp decline in US stock markets forced investors to liquidate highly liquid gold positions to cover margin calls in other assets.

Gold is increasingly being used as an urgent source of liquidity rather than a safe haven in the current environment.

Meanwhile, Brent crude oil hovered above $110 per barrel due to the effective closure of the Strait of Hormuz, intensifying inflationary pressures by raising shipping and production costs.

Concerns that central banks may keep interest rates higher than expected continued to strengthen the US dollar, reducing the appeal of non-interest-bearing assets such as gold and silver.

Gold rose more than 65% last year amid economic uncertainty, central bank purchases, and a weak US dollar, but rising energy costs and hawkish monetary policy expectations in the current geopolitical climate suggest that precious metals may remain under pressure for some time.