Diving! The situation in Iran continues to escalate! Gold and silver, what is happening?

Precious metals, collectively plunging!

On March 23rd during trading hours, gold and silver prices both experienced a sharp drop. Spot gold prices once fell nearly 4%, hitting a low of $4,318 per ounce; spot silver once dropped nearly 5%, falling below $65 per ounce; the Thai Futures Exchange announced a temporary suspension of silver online futures; the Shanghai Silver main contract dropped over 8% during trading, breaking below 16,000 yuan per kilogram.

Gold-related stocks also declined across the board. In the Hong Kong stock market, as of press time, Chifeng Gold plunged over 24%, Lingbao Gold fell more than 14%, and Laopuo Gold dropped over 10%. In the A-share market, Chifeng Gold hit the limit down, Sichuan Gold fell over 9%.

Market analysts pointed out that since the outbreak of the Iran conflict, soaring oil prices have heightened inflation risks and reduced the likelihood of recent rate cuts by the Federal Reserve and other central banks. This is a “bearish” factor for the non-yielding gold. Additionally, gold may have faced liquidity-driven sell-offs, as some economies sell part of their gold holdings to raise cash.

Gold and silver plunge collectively

This morning, gold and silver markets followed global stock markets in a sharp decline. During trading, spot gold prices once fell nearly 4%, COMEX gold futures dropped over 5%; spot silver fell below $65 per ounce, with a nearly 5% decline, and COMEX silver futures plunged nearly 7%, hitting a low of $64.8 per ounce. As of press time, spot gold was still down over 3%, spot silver fell nearly 4%, COMEX gold futures declined nearly 5%, and COMEX silver futures dropped over 6%.

Gold-related stocks also suffered heavy losses. By midday, in the Hong Kong market, Chifeng Gold fell 24.95%, Lingbao Gold dropped 14.83%, Laopuo Gold, Datang Gold, and Wanguo Gold Group declined over 10%, Tongguan Gold fell over 9%, and Shandong Gold dropped over 8%. In the A-share market, Chifeng Gold hit the limit down, Sichuan Gold fell over 9%, Shanjin International declined over 8%, China Gold fell over 7%, and Hunan Silver, Zhaojin Gold, and Hengbang Co. dropped over 6%.

Amid ongoing Middle East conflicts, the market expects gold to be sold off due to liquidity needs. Ole Hansen of Saxo Bank said there are rumors that some economies may be forced to raise liquidity, possibly including selling gold. The head of commodities strategy stated, “While this is not a confirmed driver, it has intensified a more cautious tone.”

Hansen added, “Despite geopolitical pressures, gold has failed to rise, highlighting that rising real yields, a strong dollar, and position adjustments have overshadowed its traditional safe-haven role.”

Nationwide analyst Mark Hackett pointed out that traditional safe-haven assets are collectively failing. Bonds continue to bleed due to inflation and concerns over the US government’s budget, while gold also declines. Money market funds have become the preferred safe haven for investors, indicating funds are parked on the sidelines rather than shifting into systemic allocations.

Rising oil prices intensify inflation risks

During today’s Asian trading session, oil prices continued to climb. As of press time, WTI crude rose nearly 1% to $99.13 per barrel, Brent crude increased 1.44% to $107.91 per barrel.

Since the outbreak of the Middle East conflict, soaring oil prices have increased inflation risks and reduced the likelihood of rate cuts by the Federal Reserve and other central banks. This is unfavorable for non-yielding gold. Gold has declined for eight consecutive trading days and just recorded its largest weekly drop since 1983.

In the three weeks since the Iran conflict began on February 28, part of the decline in gold prices has been due to investors forced to sell assets elsewhere to cover losses in their portfolios.

Last weekend, US President Trump set a two-day deadline for Iran to reopen the Strait of Hormuz, threatening to bomb its power plants. Iran responded that if its power facilities are attacked, it will “completely” close the strategic waterway and target energy, information technology, and desalination infrastructure. Trump’s ultimatum was issued at 7:45 PM New York time last Saturday.

If calculated from Trump’s posting time, the 48-hour deadline would expire around 7:45 PM Eastern Time on March 23, or 7:45 AM Beijing time on March 24. As the deadline approaches, attention is not only on whether Iran will further release ships but also on whether the US will escalate the confrontation by directly striking Iran’s critical infrastructure. The next move between the US and Iran could be a shift from threats to actual action.

According to CCTV News, current public information indicates that this “48-hour” period has not been supplemented with other official documents, and the public generally estimates it based on Trump’s posting time. This approach has a clear political communication purpose: it avoids lengthy policy documents and legal procedures, yet quickly creates a clear narrative clock, reducing the complex situation to a single question: will Iran make substantial concessions before the deadline? For Trump, this continues his usual high-pressure negotiation style and helps him control the narrative domestically and internationally.

More importantly, Trump’s move is also redefining the public goal of this conflict. In recent days, Trump has hinted at “approaching the goal,” but with the Strait of Hormuz blocked, rising oil prices, and market concerns over global energy supply and inflation, the White House has clearly elevated “restoring the Strait’s open passage” as the new benchmark.

The Strait of Hormuz accounts for about 20% of global oil and liquefied natural gas transportation. If it remains blocked long-term, the impact will quickly transmit to oil prices, shipping, inflation, and consumer expectations. Focusing on reopening the strait is more specific than broadly talking about “weakening Iran” or “completing the mission,” and easier to explain to allies, markets, and voters.

Meanwhile, there are signs that Trump’s move may not be purely escalation but also leaving room for potential diplomatic talks. It has been disclosed that Trump’s team has begun discussing possible negotiations with Iran and their conditions, including reopening the Strait of Hormuz and long-term arrangements on Iran’s nuclear and missile issues. In this sense, the “48-hour” ultimatum not only serves as deterrence but also sets topics and thresholds for future negotiations. However, since there is no direct contact between the US and Iran at present, and conditions conveyed through third parties differ significantly, the current situation is better described as “pressure while preparing,” rather than a shift toward negotiations.

Capital.com analyst Kyle Roda stated that, due to technical reasons, “gold is expected to rebound in the short term.” He said much depends on whether “Trump will follow through on his threat to strike Iran’s power plants.”

The 14-day relative strength index (a momentum indicator) for gold further fell below 30, which some traders interpret as an oversold signal. Last Friday’s US government weekly data showed that, as of March 17, hedge funds and large speculators increased their net long positions in gold to the highest level in seven weeks.