Gold and silver prices plummet amid geopolitical conflicts and inflation risks

On March 19, the global precious metals market experienced intense volatility, with gold and silver prices plunging sharply, marking the largest single-day decline in recent history. Spot gold fell by 3.5%, briefly dropping to the $4,500 level, hitting a six-week low. Silver also plummeted by 12% during trading, touching a low of $65.515 per ounce, before narrowing its losses significantly and closing down 3.3% in New York late trading.

Futures markets also came under pressure, with COMEX gold futures dropping 4.86% to $4,657.80 per ounce; COMEX silver futures fell 6.29% to $72.840 per ounce.

Since the Middle East conflict began, gold has been declining for several consecutive weeks, with a total drop of nearly 8% this week, potentially marking the largest weekly decline since March 2020.

As of 9:45 AM on March 20, spot gold was quoted at $4,687.21 per ounce, and spot silver at $74.27 per ounce.

The sharp decline in gold and silver was driven by multiple overlapping factors.

Some analysts believe that the significant volatility on Thursday was partly due to prior gains, which had accumulated substantial profit-taking, and after negative news, investors rushed to lock in profits.

Investors are also considering that current inflation risks may force major global central banks to end easing policies or even restart tightening, leading gold and silver to become entangled in a broad global asset sell-off.

On the news front, the latest data from the U.S. Department of Labor showed that initial unemployment claims fell to 205,000 for the week ending March 14, the lowest level since January last year, highlighting the resilience of the U.S. labor market and somewhat dampening market expectations for Fed rate cuts.

The ongoing escalation of Middle East geopolitical tensions has been a key trigger for the decline in gold and silver prices. Disruptions in shipping through the Strait of Hormuz have directly pushed international oil prices toward $100 per barrel, raising energy costs and fueling global concerns over inflation rebound. Analysts believe that high oil prices further diminish expectations of the Federal Reserve cutting interest rates within the year.

More notably, inflation risks are prompting a shift in global monetary policy. This week coincides with the “Super Central Bank Week,” where major central banks like the Federal Reserve and the European Central Bank are likely to keep interest rates steady. However, their policy guidance has clearly shifted toward caution. Market pricing shows that expectations for rate cuts by the Fed and Bank of England this year have completely faded, while expectations for ECB rate hikes have increased. The Reserve Bank of Australia has already resumed rate hikes, indicating that the global easing cycle may be officially ending.

Both gold and silver experienced record gains last year, rising 66% and 135%, respectively. Since 2026, their price movements have become markedly more volatile. Analysts generally believe that in the short term, gold and silver will continue to be influenced by inflation expectations, central bank policies, and geopolitical developments. However, in the medium to long term, ongoing geopolitical uncertainties and de-dollarization trends still provide structural support for gold, with limited room for significant further declines.