Gold and silver prices plummeted despite ongoing Iran war tensions, defying traditional safe-haven expectations.
Gold crashed nearly 25% from its January peak of $5,602 to a low of $4,100, currently trading around $4,500. Silver dropped approximately 50% from its all-time high of $121 to as low as $61.
The Iran conflict initially sparked concerns over energy security and global stability, but created an unexpected market dynamic. Surging oil prices and renewed inflation fears forced investors toward liquidity and higher-yielding assets over precious metals.
Rising US Treasury yields and a stronger dollar became dominant factors overriding geopolitical safe-haven demand. Higher inflation expectations prompted markets to anticipate fewer Federal Reserve rate cuts, potentially tightening monetary policy.
The stronger dollar made metals more expensive for international buyers while increasing the opportunity cost of holding non-yielding gold. Leveraged futures and ETF positions reversed quickly from last year's extraordinary gains.
Gold rose over 60% in 2025, delivering one of its best performances in decades as central banks accumulated reserves. Silver surged roughly 145% last year due to industrial demand from solar panels, electronics and electric vehicles.
The 2026 correction represents one of the sharpest reversals in recent memory, marking a classic flight to liquidity rather than quality risk assets.