Gold posts worst week since 2020 as iran war reshapes markets

Gold is having its worst week in five years. The metal slid to around $4,685 per ounce by Thursday, down roughly 7% over the past five trading sessions — the steepest weekly decline since March 2020 — as the fallout from the US-Israel strike on Iran continues to ripple through every corner of global finance.

Why the safe haven is anything but safe right now

The Strait of Hormuz blockade did something counterintuitive: it crushed gold. The logic, once you follow the chain, is brutal in its simplicity. The supply shock drove energy prices higher, reignited inflation expectations, and killed any remaining hope that the Federal Reserve would ease monetary policy anytime soon. Jerome Powell, speaking Wednesday, kept rates unchanged and offered nothing to suggest that calculus is about to shift.

When rate cuts evaporate as a prospect, gold loses its core argument. It generates no yield. Treasuries do. Capital moved accordingly, flooding into fixed income as investors priced in not just a hold but a potential hike. The Bloomberg Dollar Spot Index edged up 0.2% on Friday — a modest move on paper, but the dollar's broader appreciation over the week compounded the pressure on a metal priced in that very currency.

The 2022 playbook is back, and nobody is happy about it

The pattern is uncomfortably familiar. When Russia invaded Ukraine, gold spent seven consecutive months in the red through October 2022 — the longest such losing streak on record. The current trajectory echoes that episode with unsettling precision. Since the US-Israel operation against Iran last month, gold has bled out week after week, with investors selling bullion to cover losses elsewhere in their portfolios.

Gold-backed ETFs are heading for a third straight week of outflows. Holdings have dropped by more than 60 tonnes in that span. Robert Gottlieb, a former precious metals trader at JPMorgan Chase who now operates as an independent market commentator, was blunt: