Gold, metals plunge as US dollar surges on Iran war fears

Precious and industrial metal markets have witnessed sharp declines as geopolitical turmoil in the Middle East drives investors toward safe-haven dollar liquidity. The joint US-Israeli military strikes on Iran pushed Brent crude oil above $80 per barrel for the first time since January 2025, intensifying global inflation fears and strengthening the US Dollar Index to 99.4—hovering near its 14-week peak.

Commodity Price Collapse

The dollar's surge triggered a broad sell-off across commodity markets. Gold dropped 5.1% to $4,996.5 per ounce, while silver plummeted 16.8% to $78, revealing significant market volatility. Industrial metals suffered similar fates as investors abandoned riskier assets, with platinum falling 14.9% to $2,013 per ounce, palladium declining 10.5% to $1,601.6, and copper shedding 5.2% to $5.7 per pound. Trading sessions on Wednesday saw partial recoveries, with gold rebounding to $5,160, silver to $84.80, platinum to $2,148, and palladium to $1,689.

Trade Costs and Central Bank Implications

Futures and commodity markets analyst Zafer Ergezen told Anadolu that the sell-offs reflect deeper concerns about global economic activity, with regional conflicts and threats to the Strait of Hormuz severely inflating insurance and freight costs as shippers reroute around the Cape of Good Hope. "Routes are changing, ships are having to wait — all this means that global trade faces increased costs, not only due to oil and natural gas, but in general terms," he said. Ergezen noted that rising global trade costs trigger inflationary effects, leading markets to expect central banks to postpone rate cut cycles and potentially skip rate decisions at upcoming meetings. "We are seeing deeper sales in industrial metals, while precious metals had reached new peaks this year," he added.