Key Takeaways
- Precious metals experienced severe losses Thursday, with gold futures declining over 7% to reach $4,558 per ounce and silver tumbling more than 9%.
- The Federal Reserve maintained its benchmark rate at 3.5%–3.75%, with Chair Powell indicating reduced expectations for future rate reductions.
- Following Israel’s attack on the South Pars gas facility, Iran retaliated with strikes targeting energy infrastructure throughout the Middle East.
- Major mining companies saw share prices decline in premarket activity, with Freeport-McMoRan, Newmont, and Royal Gold experiencing notable drops.
- Market participants have pushed back rate cut expectations to September or later, strengthening the dollar and weighing on gold.
Precious metals experienced one of their most dramatic selloffs in months on Thursday, as market participants grappled with the dual pressures of a hawkish Federal Reserve and escalating military tensions in the Middle East.
BREAKING: Spot gold extends its selloff to -$400/oz on the day, now trading at $4,500/oz for the first time since February 2nd. pic.twitter.com/ARqkGaABpz
— The Kobeissi Letter (@KobeissiLetter) March 19, 2026
By early Thursday trading, continuous gold futures had plummeted more than 7% to $4,558 per ounce, representing a $289 decline. Spot prices for gold were down 4.3% at $4,609.02 per ounce as of 8:36 AM ET. Silver witnessed an even steeper fall, with futures dropping 9.3% and spot prices declining 11% to $67.17 per ounce.
The dramatic decline brought gold significantly below the $5,000-per-ounce threshold it had maintained throughout the past month.
Federal Reserve Maintains Policy, Dims Rate Cut Outlook
On Wednesday, the Federal Reserve maintained its current policy stance, holding benchmark rates within the 3.5%–3.75% corridor. Chair Jerome Powell highlighted mounting inflationary pressures and indicated expectations for “a meaningful amount of movement toward fewer cuts” in the coming months.
The Fed’s decision came alongside Wednesday’s release of robust U.S. producer inflation figures, which intensified concerns. Financial markets responded by recalibrating their rate cut timeline, with CME FedWatch data indicating expectations have shifted to September at the earliest.
As a non-interest-bearing asset, gold typically becomes less attractive when interest rates remain elevated for extended periods. During such times, investors frequently rotate into assets that generate yield.
“Fed rate cuts have been pushed out further in the future,” noted Adrian Ash, a researcher at BullionVault. “Mechanically, that would be bad for gold.”
While Ash characterized the current period as a “test” for the precious metal, he refrained from suggesting prices have reached their floor.
Iranian Retaliation Disrupts Energy Infrastructure
Gold’s decline occurred in parallel with a significant surge in crude oil valuations. Brent crude futures climbed 6.3% following Iran’s overnight strikes on critical energy facilities throughout the Middle East.
Tensions intensified dramatically Wednesday after Israeli forces targeted South Pars, recognized as the planet’s largest natural gas field. Iran’s military response included strikes on numerous regional energy installations and continued assaults on Israeli territory.
The Strait of Hormuz, a vital chokepoint for international petroleum and natural gas shipments, has been effectively shut down, creating additional upward momentum for energy commodity prices.
Elevated crude prices carry inflationary implications, which further diminishes prospects for imminent Federal Reserve rate reductions.
OCBC analysts observed in a client note: “The market is effectively trading less on geopolitical hedging demand and more on the worries of higher inflation risks delaying Fed cut trajectory.”
They continued, stating that safe-haven demand for gold is “being offset by the drag from rising real yields.”
Mining sector equities also suffered losses during premarket hours. Shares of Freeport-McMoRan decreased 4.4%, Newmont declined 7.6%, and Royal Gold retreated 4.6%.
The greenback appreciated against major currencies, reflecting the higher-for-longer rate environment, creating additional resistance for dollar-denominated gold prices.
According to CME FedWatch data, market participants have priced out any possibility of rate cuts before September, representing a postponement from earlier projections.
