Gold, Silver Prices Tumble Sharply Amid West Asia Tensions; Investors Turn Cautious

Experts say that gold is generally considered a safe-haven against inflation, but this time, fears of rising interest rates are proving negative for it. Higher energy prices are likely to increase inflation, which could lead central banks to keep interest rates high for longer. Since gold pays no interest, investors are avoiding it.

According to analysts, sharp fluctuations in gold prices may continue in the near future as investors adopt risk-reduction strategies. Geopolitical tensions related to Iran have increased inflation concerns, weakened expectations of interest rate cuts, and also put pressure on global economic growth.

Gold fell to a four-month low of $4,098 per ounce in early trading on Monday. This decline was driven by significant weakness in China's stock market, which recorded its biggest drop in a year. However, some recovery followed, and spot gold was trading down 2.5% at $4,377 per ounce. The market experienced some relief when US President Donald Trump indicated he was postponing potential attacks on Iran's energy infrastructure.