Gold Prices Plunge 2%, Silver 3%, Impacted by Middle East Conflict and US Inflation Concerns
NEW YORK - Global gold prices dropped around 2% at the close of trading on Monday (4 May 2026) local time, or Tuesday (5 May 2026) morning Western Indonesia Time, weighed down by the strengthening of the United States dollar and rising inflation concerns due to the heating up of conflict in the Middle East.
Citing Reuters, spot gold fell 2% to $4,523.23 per ounce. Meanwhile, US gold futures weakened 2.4% to $4,533.30 per ounce.
Head of global commodity strategy at TD Securities, Bart Melek, stated that the latest escalation in the US-Iran conflict has made markets worry again about inflation and the direction of US central bank interest rate policy.
“The latest news clearly does not give the market confidence that everything will be fine and has brought back the threat of inflation issues, accompanied by sufficiently hawkish signals regarding interest rates,” Melek said.
On the other hand, US President Donald Trump’s efforts to use the US Navy to reopen shipping lanes have further exacerbated the conflict.
That situation drove a strengthening of the US dollar and a surge in Brent crude oil prices of more than 5%.
The strengthening of the US currency makes precious metals more expensive for holders of other currencies, thereby reducing investor interest in gold.
The surge in energy prices also increases inflation concerns and strengthens expectations that global central banks will maintain high interest rates for longer.
Last week, the Fed decided to hold its benchmark interest rate in a decision described as the most divided since 1992, amid growing concerns about the impact of rising energy prices on the economy.
Market players are now awaiting several US economic data releases this week, from job openings data and the ADP employment report to April 2026 payrolls.
Although gold is known as a hedge asset (safe haven) against inflation and geopolitical uncertainty, high interest rates tend to reduce the attractiveness of precious metals because they offer no yield.
“I see strong support levels for gold around $4,200 per ounce. I think there are broader issues at the end of the year that could support prices. However, uncertainty and the possibility of interest rate hikes could push some traders out of the market in the short term,” Melek explained.
Declines also occurred in other precious metals. Spot silver fell 3.2% to $72.95 per ounce, platinum weakened 1.7% to $1,955.95 per ounce, and palladium dropped 2.9% to $1,481.00 per ounce.