Gold Falls Hardest Since 2013 Crash as Iran War's Inflation Shock Sends Borrowing Costs Soaring

Gold experienced its sharpest weekly decline since the 2013 crash, falling 9.5% to around $4,560/oz amid energy-driven inflation fears sparked by the Iran conflict. Silver also slammed lower, dropping 12.2% to $73.45/oz, while crude oil hovered near $100/bbl as geopolitical risks disrupted Strait of Hormuz oil flows. Rising oil and gas prices pushed US 10-year Treasury yields to the highest levels since July 2025, with German Bund and UK Gilt yields reaching historic highs, reinforcing expectations of renewed central bank rate hikes to combat inflation. International Energy Agency chief Fatih Birol highlighted the unprecedented scale of the energy security threat, surpassing the 1970s crisis and post-Ukraine invasion shocks. Fed Funds futures shifted sharply, now pricing a 33% probability of a Fed rate hike by end-2026, up from zero just days prior. Real yields on 10-year US TIPS surged to 1.98%, reflecting tightening monetary conditions. Meanwhile, copper futures plummeted 6.7%, heading for their worst week since mid-2025 amid global growth concerns. The fallout is causing significant outflows from bullion ETFs, with GLD and IAU gold trusts posting continuous weekly redemptions for the third and sixth consecutive weeks, respectively, while the SLV silver ETF also shrank for a third straight week since the Iran conflict began. These flows and price action underscore heightened risk-off sentiment and repositioning due to inflation and rate hike fears. Traders should monitor geopolitical developments around the Strait of Hormuz closely, as renewed disruptions could further pressure energy and metals markets. Near-term catalysts include upcoming central bank meetings and evolving US inflation data, which will guide the trajectory of interest rates and safe-haven metal demand. Potential contrarian opportunity might emerge if inflation proves transitory or if central banks pivot back to easing amid a slowdown.