On Saturday, U.S. President Donald Trump threatened to “obliterate” Iran’s power grid if it failed to reopen the Strait of Hormuz within 48 hours. The persistent conflict is stoking fears that high inflation will require high interest rates to combat. High interest rates are typically bearish for gold, making it a less attractive alternate investment.
Front-month gold futures tumbled 8.9% last week to settle at $4,609.60 an ounce on Comex after the most-active contract rolled to June from April. June futures fell 0.7% Friday. The front-month contract settled below $5,000 for the final three days of last week, the first time the contract has closed below that threshold since Feb. 19. Bullion has plummeted 12% this month after climbing 11% in February and rising 9.3% in January. It rallied 64% last year. The April contract is currently down $129.40 (-2.83%) an ounce to $4445.50 and the spot price is $444.50.
Stocks and bonds sold off along with precious metals as the rhetoric between the U.S. and Iran escalated, but also rebounded on this morning’s White House announcement. Shares in Asia – where most of the crude oil that transits the Strait of Hormuz goes – were set to enter a correction.
In a switch since the war began, almost no investors tracked by the CME FedWatch Tool expect the Fed to cut interest rates this year and many are now betting on a rate hike instead. Over 91% of investors tracked by the tool are betting on rates staying unchanged at the next policy meeting in April, and the rest are now betting on an increase.
Fed policymakers last week kept interest rates unchanged again at 3.50% to 3.75%. Chairman Jerome Powell said policymakers are closely watching inflation and the economic effects of the conflict, with inflation elevated even before the war sent oil and gasoline prices soaring.
The Fed has kept interest rates unchanged this year after three previous rate cuts. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts in 2024.
A number of Fed officials are scheduled to speak this week, and consumer sentiment data for March comes out Friday.
Front-month silver futures slid 14% last week to settle at $69.66 an ounce on Comex, the lowest level since Dec. 22. The May contract fell 2.2% Friday. The most-active contract touched a record above $115 in January. Silver is down 25% this month after gaining 19% in February and advancing 11% in January. It rose 141% last year. The May contract is currently down $0.944 (-1.36%) an ounce to $68.720 and the spot price is $68.84.
Spot palladium decreased 8.8% last week to $1,448.00 an ounce after losing 0.9% Friday. Palladium is down 20% this month after gaining 8.8% in February and advancing 2.4% in January. Palladium rose 74% last year. The DG spot price is currently up $10.30 an ounce to $1475.50.
Spot platinum fell 4.1% last week to $1,978.90 an ounce, though it rose 0.7% Friday. It’s down 16% this month after advancing 15% in February and gaining 1.4% in January. Platinum increased 122% in 2025. The current spot price is down $81.30 an ounce to $1919.50.
