Editor’s note
- Gold prices plummet due to conflict in the Middle East and interest rate hikes
- Conflict in the Middle East and global interest rate expectations
- US Federal Reserve likely to raise interest rates
Gold prices plummet due to conflict in the Middle East and interest rate hikes
The price of gold fell to US$ 4,200 for the first time since November 2025. According to Refinitiv, gold is currently trading at US$ 4,226.57 per troy ounce, a drop of 5.8% compared to Monday, March 23, 2026, at 14:01 WIB.
The price of gold fell by as much as 7.3% today and traded at US$ 4,161.89 per troy ounce. This is the lowest level since November 2025.
Last week, gold prices fell by 10.58%. This is the largest drop since the week ending March 4, 1983, or 43 years ago.
Conflict in the Middle East and global interest rate expectations
Gold prices fell as escalating conflicts in the Middle East fueled inflation concerns and drove up global interest rate expectations
“As the conflict with Iran enters its fourth week and the oil price hovers around 100 dollars per barrel, market expectations have shifted from interest rate cuts to potential increases. This reduces the attractiveness of gold from a yield perspective,” said Tim Waterer, chief market analyst at KCM Trade, quoted by Reuters.
Iran said on Sunday that it would attack the energy and water systems of the Gulf states if US President Donald Trump actually carries out his threat to attack the Iranian power grid within 48 hours.
Asian stocks fell, while the oil price remained well above 110 dollars per barrel. “The high liquidity of gold appears to be detrimental in this risk-averse environment. Due to the decline in equity markets, investors are selling their gold positions to cover margin calls on other assets,” Waterer added.
The closure of the Strait of Hormuz has kept oil prices high, fueling inflation concerns due to rising transport and production costs.
The US Federal Reserve is likely to raise interest rates
Although inflation typically makes gold more attractive as a hedge, high interest rates actually depress demand for this non-performing asset.
“The increasing shift from safe investments to macroeconomic positions could further increase downside risks as the US dollar strengthens and the likelihood of further easing of Fed policy diminishes,” according to BMI, a division of Fitch Solutions.
Market expectations for an interest rate hike by the Federal Reserve this year have risen sharply.
According to the CME’s FedWatch tool, the US central bank is more likely to raise interest rates by the end of 2026 than to lower them. These expectations have caused the dollar index to rise to 99.85. Gold purchases are made in US dollars, so a rising dollar will limit demand for gold. ***obs
