Gold Price Plummets Amid Panic Selling as "Flush" Storm Looms
Gold and silver prices continue to slide amid ongoing conflict in the Middle East. According to Refinitiv, gold closed at US$5,078.89 per troy ounce on Thursday 12 March 2026, down 1.9%. This weakness extends a two-day decline of 2.2% and marks the lowest price since 5 March 2026. The decline has pushed gold below the US$5,000 level after it had held above US$5,100 for four consecutive days.
Gold prices showed modest recovery on Friday 13 March 2026, rising 0.25% to US$5,091.38 per troy ounce at 06.18 WIB.
Whilst geopolitical tensions typically support gold prices, renewed concerns about inflation have unsettled investors. Despite gold’s recent rally stalling, several banks remain optimistic about gold’s prospects.
Gold prices surged during the 12-day conflict with Iran last year, before retreating following the ceasefire announcement. However, two weeks into the current conflict, gold has shown relatively muted movement. Gold rallied from US$5,296 to US$5,423 per troy ounce following US and Israeli strikes on Iran on 28 February, consistent with traditional safe-haven dynamics. However, subsequent selling pressure saw gold fall more than 6% to US$5,085 on 3 March. This week, as tensions escalated, gold traded in the range of US$5,050 to US$5,200.
According to Ross Norman, CEO of precious metals website Metals Daily, several factors explain gold’s inability to sustain gains, including US dollar strength and rising Treasury yields. Norman notes that rising oil prices could trigger prolonged inflation and potentially higher interest rates as central banks grapple with potential closure of the Strait of Hormuz, a critical shipping lane for global oil and gas trade. Higher interest rates typically increase the attractiveness of yield-bearing assets such as government bonds compared to precious metals like gold, which generate no yield.
“Gold and silver movements currently appear uninspiring, but that may be reasonable given the significant movements in recent months,” Norman told CNBC International. He added that some institutional investors have become more cautious holding bullion due to unusual price volatility.
Another explanation is that conflicts frequently trigger panic selling waves among investors, potentially triggering what is known as a “flush”, where traders are forced to sell positions as prices decline, according to Amer Halawi, head of research at Al Ramz.
“If a liquidity crisis occurs, almost all assets will be sold until markets understand the situation and investors refocus on appropriate assets,” Halawi told CNBC on the “Access Middle East” programme on Tuesday. “Traditionally, when shocks occur, even gold can be sold first before eventually rising again,” he added.
Despite short-term volatility, several banks remain optimistic about gold’s prospects. JPMorgan predicts gold will reach US$6,300 per ounce by the end of 2026, whilst Deutsche Bank maintains its year-end target of US$6,000 per ounce, based on their latest research notes.