Gold Prices Plummet Amid Iran War
Gold prices have plummeted by 13% since the outbreak of war with Iran, defying its reputation as a safe-haven asset. This unexpected move has surprised many in the market.
The S&P 500 and Nasdaq have fared slightly better, dropping 7% and 8%, respectively, while Bitcoin has declined only 2%. Deutsche Bank Research notes that gold's weakness is unusual during this time.
Experts attribute the gold selloff to several factors: its high price before the war, the attractiveness of other low-risk assets, and a mixed record of living up to its safe-haven status. Gold can 'break free of longstanding patterns and trade to its own tune,' says Adam Turnquist, chief technical strategist at LPL Financial.
The recent drop follows a period of strong performance for gold, which reached an all-time high of nearly $5,600 per ounce in January. Despite falling to about $4,490 an ounce, the price remains nearly 50% higher than where it stood a year ago. However, this sharp rise left gold vulnerable to a selloff, according to Campbell Harvey, a professor at Duke's Fuqua School of Business.