Gold Prices Stabilize Following Historic 15% Drop Amid Iran Conflict
Energy shocks, liquidity crunches, and margin calls forced a historic selloff, but the ultimate safe-haven metal is finally finding its footing amid ongoing Middle East volatility.
After nine agonizing days of relentless selling, gold bugs can finally step off the ledge. The precious metal is showing signs of life, steadying after a dramatic 15% plunge triggered by the eruption of the Middle East conflict. The sheer panic that gripped the market seems to be subsiding, at least for the moment, as traders assess a chaotic geopolitical and economic landscape.
For those tracking the precious metals market, the numbers have been dizzying. Spot gold was largely treading water at a still-lofty $4,408.46 an ounce in London by midday Tuesday. The futures market painted a slightly mixed picture, with Gold (COMEX: GC=F) dipping nominally, while Silver (COMEX: SI=F) managed a spirited 1.5% climb to $70.19 an ounce. Even Platinum (NYMEX: PL=F) edged into the green.
But why did the ultimate safe-haven asset crater during a geopolitical crisis in the first place? It all comes down to the brutal reality of liquidity. When the Strait of Hormuz effectively slammed shut and Persian Gulf energy infrastructure took a direct hit, Crude Oil (NYMEX: CL=F) and Natural Gas (NYMEX: NG=F) skyrocketed. This sudden energy shock resurrected the specter of persistent inflation, practically guaranteeing that the Federal Reserve and other central banks will keep interest rates uncomfortably high.
Facing severe margin calls on underperforming equities and bonds, terrified investors did what they always do in a liquidity crunch: they sold their winners. Gold, which had been enjoying a historic, prolonged rally, became the easiest liquid asset to dump. Peter Kinsella, global head of forex strategy at the privately held Union Bancaire Privee UBP SA, summed it up perfectly, noting that investors routinely liquidate heavily positioned, well-performing assets to fund margin calls during massive crises.
This is not exactly uncharted territory. Suki Cooper, global head of commodities research at Standard Chartered Plc (LSE: STAN), pointed out that gold often endures intense downside pressure for four to six weeks following extreme distress, simply because it functions as a reliable liquid asset when cash is desperately needed. We saw a nearly identical script play out during Russia’s invasion of Ukraine in early 2022. An initial safe-haven spike was rapidly swallowed by a months-long decline as energy shocks rippled through the global economy and squeezed wallets.
Adding to the heavy downside pressure is the sheer cost of energy itself. Countries that traditionally hoard bullion, many of which are net energy importers, are suddenly watching their dollar reserves evaporate to pay for skyrocketing oil and gas bills. There simply are not enough dollars left over to recycle into the gold market.
Meanwhile, the geopolitical chessboard remains highly volatile. Fighting continues unabated, though President Donald Trump recently indicated that talks are underway to end the conflict. Concurrently, the Wall Street Journal, reported that US partners in the Persian Gulf might officially join the fight. Amidst the chaos, Bloomberg reported that Turkey's central bank is exploring gold-for-foreign currency swap transactions in the London market to defend the lira against fierce volatility linked to the Iran conflict.
For now, the gold market is taking a much-needed breather. The short-term price action remains entirely at the mercy of panic positioning and margin calls, but as experts note, the longer-term monetary drivers that propelled gold to these staggering heights haven't gone anywhere.
Source:
- Xie, Y., & Ryan, J. (2026, March 24). Gold Steadies After Nine Days of Losses Fueled by Iran War. Bloomberg / Yahoo Finance, owned by Apollo Global Management (NYSE: APO).