Gold and silver are under pressure once again as the US dollar gains strength. The US dollar index strengthened to trade at $100, putting pressure on almost all metals, including precious metals like gold and silver. Gold is at $4,675, down 2.3%, while silver has fallen more sharply, by nearly 2.75%, to trade at $73.
Gold denominated in dollars has now lost 13% of its value since the conflict started on February 28 due to the dollar’s safe-haven rise. The US dollar was at around 97 before the war but now is back above 100.
The trigger is Trump’s remarks. President Trump’s address on Wednesday pushed the US dollar higher, putting pressure on dollar-denominated precious metals. “Gold prices declined, ending a four-day gain, as the US dollar rebounded after President Donald Trump offered no definitive timeline for ending the Middle East conflict, which effectively strengthened the US dollar,” says Jigar Trivedi, Senior Research Analyst at Indusind Securities.
Here is the full picture. After falling into the bear market territory, having dipped 20% from its recent highs, gold was making its way up to emerge as a safe-haven asset. However, Trump’s prime-time address nationwide changed the scenario in the financial markets.
President Trump indicated that the US would take strong military action against Iran within two to three weeks, suggesting that the country could face severe consequences. He noted that the US is nearing its strategic objectives in Iran but warned that military actions may escalate soon.
This was enough for the oil price to spike, sending stronger signals to the US dollar. With the dollar gaining strength, the opportunity cost of holding non-yielding assets like gold and silver goes up. Investors, therefore, shun gold and silver to divert funds into dollar-denominated assets. “The greenback has recently emerged as a safe-haven asset, putting pressure on dollar-denominated precious metals. Oil prices also resumed their advance, reinforcing inflation concerns and expectations of tighter monetary policy,” says Trivedi.
There is another headwind for gold beyond the stronger dollar. Expectations of higher rates for longer are also weighing on gold. The US Fed is likely to keep rates unchanged for a long time if war-led inflation remains sticky. “Traders have fully priced out the prospect of US rate cuts in 2026, a stark reversal from pre-war expectations of two cuts,” adds Trivedi.
Gold and silver price movements are entirely news-driven now. After a bull run that started in October 2022, gold has created an all-time high of $5,602 in January-end, jumping over 250%. After the start of the Iran war, gold continues to face headwinds.
What comes next is a matter of debate. There are contrarian voices in the market, some predicting higher levels for gold while some call for a bigger fall ahead.
Goldman Sachs forecasts gold to reach $5,400 by the end of 2026, influenced by anticipated Federal Reserve rate cuts, normalization in speculative positioning, and ongoing central bank purchases.
However, some market experts warn that the downside may not be over yet. In an interview with Kitco News, Avi Gilburt, veteran technical analyst and founder of ElliottWaveTrader, said he sees two distinct technical paths that could ultimately drive the precious metal below $4,000, toward $3,800 an ounce. He said he will be watching to see if gold prices break resistance at $4,800 an ounce, which could then push prices to $5,200 before triggering his expected downtrend.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.