Gold Price Suffers Sharpest Weekly Fall in Six Years Amid Growing Pressure

• Gold prices have recently declined due to technical breakdowns and rising energy-driven inflation risks.
• Analysts warn of short-term bearish momentum, with potential downside below $4,000 in extreme scenarios.
• However, the long-term outlook for gold remains positive due to ongoing geopolitical uncertainty and global debt concerns.

Gold Under Pressure as Iran Conflict Continues

With the war in Iran showing no clear end, some analysts are warning gold investors of further downside risk. Rising energy prices are increasing inflationary pressures, which could force central banks to pause monetary easing and adopt a more cautious, wait-and-see approach.

The gold market recently experienced a significant technical setback when prices fell below the 50-day moving average, just under $5,000 per ounce.

According to OANDA senior market analyst Kelvin Wong, speaking to Kitco News, the sharp drop marked a potential turning point for gold.

Technical Turning Point in the Gold Market

From a technical perspective, the recent decline suggests that the 23% rally from the February 2, 2026 low of $4,402 to the March 2 high of $5,420 may have been a temporary rebound—often referred to as a “dead cat bounce”.

This implies that:

• The previous uptrend may not be sustainable
• Markets could now shift into multi-week bearish momentum

The data supports this view:

• Gold closed the week down more than 8%, its biggest weekly drop since the COVID-19 pandemic
• Spot gold fell to $4,584.10, down over 1.7% on the day
• Silver dropped nearly 14%, with prices at $68.96, down more than 5% daily

Why Gold Prices Are Falling

Several key factors are driving the current gold sell-off:

1. Profit-Taking and Speculation

Rob Howorth of US Bank Wealth Management noted that the decline is partly due to speculative activity earlier in the year. Investors who bought above $5,000 are now reducing positions.

“Speculators are now faced with a difficult choice… many positions are now at a loss, and the situation could worsen.”

2. Rising Energy Prices and Inflation Risk

Higher oil and energy prices are increasing inflation expectations. This reduces the likelihood of interest rate cuts and pressures gold.

3. Stronger Monetary Policy Expectations

Markets are scaling back expectations for Federal Reserve rate cuts, which typically weakens gold.

Middle East Geopolitics and Gold Prices

Future price movements will largely depend on developments in the Middle East, particularly:

• Whether the Strait of Hormuz reopens
• The extent of damage to global energy infrastructure
• Resolution of supply chain disruptions

Bernard Dahda of Natixis predicts gold could trade between $4,600 and $4,700 in the near term but warns of growing downside risks.

Bearish Scenario

• Continued destruction of energy infrastructure
• Prolonged war
• Central banks forced to raise interest rates

This could push gold below $4,000 per ounce

Bullish Recovery Scenario

• Limited damage to energy supply
• Oil prices stabilise
• Central banks increase gold purchases

Prices could rebound above $5,000

Federal Reserve Policy and Market Expectations

Financial markets have already begun adjusting expectations for U.S. monetary policy.

According to Commerzbank’s Thu Lan Nguyen:

• Markets previously expected ~2.5 rate cuts
• Now, even one full cut is no longer fully priced in

Federal Reserve Chair Jerome Powell has emphasised inflation risks, suggesting that further easing may be delayed if inflation persists.

Why This Matters for Gold

• Higher interest rates → stronger US dollar
• Higher bond yields → lower gold demand

As a result, gold prices could continue to face downward pressure if inflation remains elevated.

Why Gold Isn’t Acting Like a Safe Haven

Despite geopolitical tensions, gold has not behaved as a traditional safe haven. Analysts point to one key reason:

Inflation driven by energy prices

Central banks are currently holding rates steady, monitoring how the conflict affects inflation expectations rather than immediately supporting markets.

Short-Term Outlook: Critical Weeks Ahead

The next 4–6 weeks could be decisive.

Key factors to watch:

• Corporate budget adjustments ahead of summer
• Tax season in mid-April
• Central bank responses to inflation

Investor sentiment is likely to remain cautious, with limited economic data expected in the near term.

Long-Term Gold Outlook Remains Strong

Despite short-term weakness, analysts remain bullish over the long term.

Ole Hansen of Saxo Bank highlights that the fundamental drivers of gold demand remain unchanged:

• Geopolitical instability
• Rising sovereign debt
• Global economic uncertainty

He notes that investor sentiment may need to reset before confidence returns:

“Investors need to lose their emotional attachment to gold before regaining interest.”

Key Takeaways

• Gold is currently facing short-term bearish pressure
• Inflation and interest rate expectations are key drivers
• Geopolitical developments in the Middle East remain critical
• Long-term fundamentals for gold remain intact

Final Thought

While the recent correction has shaken investor confidence, most analysts agree that the gold bull market is not necessarily over. A period of consolidation may be needed before the next upward move.

As one strategist summarised:

“I wouldn’t say the bull market is over, but I would prefer to see consolidation before buying more actively on dips.”