Gold slides sharply as war fears and inflation risks hit market

Gold prices fell sharply on Tuesday, sliding toward the $5,000-per-ounce mark as a stronger US dollar and expectations of higher interest rates pressured the safe-haven metal. 

Spot gold dropped as much as 6%, hitting nearly $5,018 an ounce after last session’s record highs, while gold futures declined more than 4%. Silver also tumbled nearly 12%, slipping below $80 an ounce. Analysts say the retreat erased last week’s gains, though bullion remains up over 17% for the year.

Market sell-off amid geopolitical and monetary shifts

The decline came as investors shifted toward more attractive assets and the US dollar strengthened to a one-month high, reducing gold’s appeal for holders of other currencies. Ongoing tensions from the conflict in the Middle East—centered around the war involving the state of affairs in the region and concerns about inflation—also influenced market sentiment. Rising energy prices linked to the unrest could keep inflation elevated, reducing the likelihood of an imminent rate cut by the Federal Reserve.

Market experts argue that the dip may be temporary. Historically, gold benefits from low-interest environments, yet recent movements suggest geopolitical risks are driving demand for hedging rather than monetary policy expectations.

Despite short-term volatility, bullion continues to trade significantly higher than at the start of the year as investors balance risk and liquidity concerns.