Gold has fallen to its lowest level since late March, dropping below $4,600 an ounce as the unresolved closure of the Strait of Hormuz drives oil prices higher and raises the prospect of prolonged elevated interest rates, stripping the metal of its traditional safe-haven appeal.
Spot gold decreased to around $4,554 per ounce, its lowest since March 2026, after dropping nearly 2% in the previous session as stalled US-Iran peace talks and the continued closure of the Strait of Hormuz fuelled concerns over rising inflation. The metal has now lost roughly 13% since late February, reflecting a sharp shift in market dynamics despite persistent geopolitical uncertainty. Silver also slid, falling 2.8% to $73.39 an ounce, with platinum and palladium also declining.
The selloff appears paradoxical given gold’s traditional role as a crisis hedge, but the mechanics driving it are straightforward. The shutdown of the Strait of Hormuz has cut off roughly 20% of global oil flows, sparking what the International Energy Agency (IEA) described as the largest supply shock on record and intensifying inflationary pressures. Investors have increasingly priced in the possibility that central banks may keep interest rates elevated for longer or even tighten further, weighing on non-yielding bullion.
Rising bond yields have increased the opportunity cost of holding non-yielding bullion, limiting upside despite its traditional role as an inflation hedge.
Marc Loeffert, a trader at Heraeus Precious Metals, said the indefinite extension of the ceasefire with Hormuz still blocked prolongs market uncertainty. He added, however, that the combination of economic stagnation and rising prices could over the longer run provide fertile ground for gold’s bull market to resume.
Gold prices are expected to remain highly volatile this week amid the US Federal Reserve interest rate decision, the release of first-quarter gross domestic product (GDP) data, and other key macroeconomic indicators. Rate decisions in the European Union, the United Kingdom, and Canada are also due this week. Earlier on Tuesday, the Bank of Japan (BoJ) left its benchmark rate unchanged at 0.75%, with a split vote signalling increased odds of a hike in June.
