Precious Metals Slump as Dollar Surges on Iran Tensions

Precious metals tumbled on Thursday, with gold sliding to its lowest level since March 26, as a resurgent U.S. dollar and renewed concerns over interest rate hikes dampened investor appetite. The sell-off was triggered by fresh U.S. military strikes on Iran, which boosted the dollar and pushed oil prices higher, stoking inflation fears and clouding the monetary policy outlook.

Gold Breaks Below Key Support

Spot gold fell 1.7% to $4,380.62 per ounce, earlier touching its lowest in two months. U.S. gold futures for June delivery dropped 1.6% to $4,377.10. The dollar rose to a one-week high, making greenback-priced bullion more expensive for holders of other currencies. 'Geopolitical tensions remain high, and we've had too many false alarms from the peace deal talks. So I think the U.S. dollar is going to remain bid, and that means gold is likely to remain under pressure,' said Matt Simpson, a senior analyst at StoneX.

The U.S. military carried out new strikes in Iran targeting a military site that posed a threat to U.S. forces and commercial shipping in the Strait of Hormuz. In response, Iran's Revolutionary Guards said they targeted a U.S. airbase in Kuwait, sending oil prices up more than 3%. Elevated crude prices can accelerate inflation and keep interest rates higher for longer. While gold is traditionally seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal.

Fed Rate Hike Threat Looms

Federal Reserve Governor Lisa Cook on Wednesday said she feels the U.S. central bank should hold short-term interest rates steady for now, but with tariffs, the Iran war, and a surge in AI-related investment pushing prices higher, she is prepared to hike rates if needed. Investors are now awaiting the release of U.S. Personal Consumption Expenditures (PCE) data, due later in the day, for further clues on the Fed's monetary policy path.

Silver, Platinum, and Palladium Follow Gold Lower

Spot silver fell 3% to $72.37 per ounce, hitting a near one-month low. The metal's breakneck rally of over 140% last year is now deterring buyers in various industries, according to UBS. Its use in a wide range of industrial purposes means it is more sensitive to the economic cycle than gold. 'The demand erosion is likely to persist as long as prices remain at current levels,' UBS analysts wrote.

Platinum lost 1.4% to $1,890.81, also hitting a near one-month low, while palladium slid 1.9% to $1,364.26. The broader precious metals complex remains under pressure as the dollar strengthens and rate hike expectations weigh.

Cross-Asset Contagion: Bitcoin Also Hit

The risk-off mood extended to cryptocurrencies, with Bitcoin breaking below $73,000. The total crypto market cap shrank from $2.54 trillion to $2.45 trillion in a single session. Over $800 million in combined Bitcoin and Ethereum ETF outflows on Thursday marked the largest single-day net redemption in weeks, amplifying spot price pressure. The institutional inflow narrative that carried BTC from $60,000 to its prior highs is now fully reversed, with the eight-session ETF outflow streak representing one of the most sustained withdrawal runs since spot Bitcoin ETFs launched in the U.S.

Outlook: Dollar Strength and Data in Focus

With the dollar bid and the Fed signaling a potential rate hike, precious metals face headwinds in the near term. The PCE data release later today will be crucial in determining whether the current sell-off deepens or stabilizes. Analysts caution that until geopolitical tensions de-escalate or the Fed pivots to a dovish stance, gold and its peers are likely to remain under pressure.

1. Gold fell to a two-month low as the dollar surged on U.S.-Iran tensions.
2. Silver, platinum, and palladium all hit near one-month lows amid demand destruction and rate hike fears.
3. Bitcoin also slumped, with ETF outflows extending an eight-day streak.
4. Upcoming PCE data will provide further direction on Fed policy.

Sources: CNBC - Gold hits two-month low, CryptoNews - Bitcoin drops, CNBC - Silver demand destruction