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Gold prices dropped over 4% on Thursday, falling for a seventh consecutive session, as the Middle East conflict increased energy prices and ignited inflation concerns, raising expectations that top central banks will keep borrowing costs elevated.
Spot gold fell 4.3% to $4,612.21 per ounce by 1:31 p.m. ET (1731 GMT), its lowest level since early February.
“Gold is now a very widely held position for institutional investors and that has been on the back of the debasement trade over the last year. But the foundations of that trade are now weakening,” said Daniel Ghali, commodity strategist at TD Securities.
“For the near term, we continue to see risk to the downside. There is a very substantial amount of room for gold to sell off while maintaining its bull market era trend support.”
Gold is prized as a hedge against inflation and geopolitical turmoil, but because it does not generate interest, it tends to lose appeal in periods when rates are high.
Nearly all major developed market central banks kept rates unchanged this week, but emphasized they were ready to curb inflation should the energy shock caused by the U.S.-Israeli war on Iran persist.
Benchmark Brent oil prices jumped above $110 a barrel after Iran attacked energy facilities across the Middle East following Israel’s strike on its South Pars gas field.
Meanwhile, a U.S. official and three people familiar with the matter said President Donald Trump’s administration is considering deploying thousands of U.S. troops to reinforce its operation in the Middle East as the Iran war enters a possible new phase.
Analysts at SP Angel said gold has been hit by profit-taking and a stronger dollar, noting that after its strong rally in 2025, it is not surprising to see traders lock in gains to cover margin calls and rotate into fresh trades such as hydrocarbons amid renewed volatility.
Spot silver slipped 5.3% to $71.39 per ounce. Platinum fell 3.7% to $1,949.20, and palladium lost 2.4% to $1,440.29.
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