Gold breaks below $4,600, silver plummets 10%, and US stock index futures decline across the board

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Reporter | Hu Guangqi Jin Shan

Editor | Hong Xiaowen Jiang Peixia Zeng Tingfang

On the evening of March 19, gold and silver prices plunged further, with spot gold falling by 4.8% intraday, dropping below the $4,600 mark as of 20:40 Beijing time. Spot silver declined over 10% intraday, trading at $67.4 per ounce.

Meanwhile, Dow Jones futures fell 0.57%, S&P 500 futures dropped 0.57%, and Nasdaq 100 futures declined 0.65%. The CBOE Volatility Index (VIX) rose by 1.56 points to 26.65.

The US-Iran conflict continues—why is gold not rising but falling?

Have you noticed this phenomenon? Since the start of the US-Iran conflict, gold, as the most important safe-haven asset, has not surged as many expected. Instead, it has been declining recently. What’s going on? Has the logic of “a gunshot brings a thousand ounces of gold” become invalid? What are the real reasons behind this?

In early March, when the conflict began, market panic intensified. Under the dominance of risk aversion, gold once approached $5,400 per ounce. But afterward, on March 2, it peaked and then retreated, starting a downward trend. The main reasons for gold’s decline despite the conflict are threefold:

First, after the initial spike, many profit-taking positions accumulated earlier were closed, creating a large amount of sell pressure that strongly suppressed gold prices.

Second, the current market logic is: the potential blockade of the Strait of Hormuz could cause a sharp rise in oil prices, and markets are also worried about US inflation. If the conflict escalates, oil prices will continue to rise, which will put significant pressure on US prices. The Federal Reserve, when setting monetary policy, must consider potential imported inflation, likely leading to a pause in rate cuts. Therefore, the recent decline in gold is essentially influenced by the delay in Fed rate cuts.

Third, gold’s speculative attributes are becoming stronger. Generally, as a safe-haven asset, gold prices should remain stable. But since the Fed began cutting rates last year, gold has been rising rapidly, with increasing volatility. Currently, the gold market has a high proportion of quantitative funds, which employ leverage and follow pro-cyclical strategies—helping to push prices up or down. So, the current gold market is less about safe-haven qualities and more about speculation, marking a significant change since 2025.

If the US-Iran conflict cannot be eased in the short term, concerns about stagflation will accelerate. The conflict will lead to rising oil and related industrial commodity prices—an “supply shock.” If the Strait of Hormuz remains blocked and oil transportation is hindered, coupled with delayed releases of strategic oil reserves by various countries, oil supply will decrease, pushing prices higher and causing inflation alongside economic stagnation. Under this “stagflation” worry, stocks and bonds of related economies will be adversely affected. Although gold is a safe haven, it is relatively difficult to liquidate, which explains why recent gold inflows have slowed.

Currently, under the logic of supply shocks and “stagflation trading,” both gold and global equity and bond markets are under significant pressure. For ordinary investors, participating in gold and silver investments now requires caution due to high volatility and risk of losses. Moving forward, three aspects should be closely monitored: first, US inflation data; second, whether the Fed’s monetary policy will turn hawkish; third, the situation around the Strait of Hormuz and oil prices. The situation remains uncertain. Whether investing in precious metals or stocks and bonds, the priority should be risk management rather than profit.

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