Global Markets and Commodities Report

Gold Prices Plummet Amid Middle East Tensions

Gold plummeted as much as 3.8% to near $4,320.30 an ounce on March 23, threatening to wipe out this year's gains. The decline is attributed to the ongoing war in the Middle East, which has raised inflationary risks and reduced prospects for interest-rate cuts by the US Federal Reserve and other central banks.

Market Impact

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The conflict has driven gold's decline for eight consecutive sessions, with the metal posting its biggest weekly drop since 1983. The broader market also reflected the volatility, with crude prices retreating and equity markets experiencing significant fluctuations. In the three weeks since the war began on February 28, bullion's decline has been driven partly by forced selling as investors seek to cover losses elsewhere in their portfolios.

Key Indicators

• Bloomberg Dollar Spot Index: rose 0.1%
• 14-day relative-strength index: extended a fall below 30, indicating oversold conditions
• Hedge funds and large speculators: increased their net-long position for gold to the highest in seven weeks as of March 17

Precious Metals Prices

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• Spot gold: plunged 3.3% to $4,343.40 an ounce at 9:00 a.m. in Singapore
• Silver: slipped 3.4% to $65.61
• Platinum and palladium: also fell