Gold and silver, which surged in 2025 as safe-haven assets amid market turmoil, are now experiencing a significant downturn. Escalating conflict in the Middle East has driven oil prices up over 50 per cent, raising concerns about global inflation and interest rates. This has triggered a sharp sell-off in precious metals, reversing the trends seen in previous years when investors flocked to these commodities during times of uncertainty.
Last week, gold suffered its worst week since 1983, plummeting 11 per cent, bringing its total decline to 15 per cent since the US and Israel attacked Iran. Silver also experienced a dramatic drop, plunging 15 per cent last week and losing over 20 per cent since the conflict began. The broader Australian sharemarket has also felt the impact, falling to a 10-month low as investors shed stocks and bonds amid fears of higher energy costs affecting inflation and global economic growth. The mining sector, in particular, has taken a hit, with companies like Greatland Resources, Evolution Mining, Northern Star, and Newmont all experiencing significant declines.
Analysts suggest the oil shock has reduced the likelihood of near-term interest-rate cuts by the US Federal Reserve and other central banks, undermining the investment case for gold and silver. Concerns over rising inflation and potentially prolonged higher interest rates are placing pressure on these non-yielding assets. Despite the current downturn, some experts remain optimistic, believing that if oil prices stabilise, focus will return to underlying economic vulnerabilities that typically support gold’s value.
The World Gold Council notes that investors often liquidate gold during market sell-offs to cover margin calls, while others point out that gold had become overbought, resembling a speculative trade. Greatland Resources is an exploration and development company with a focus on precious and base metals. Evolution Mining is a leading, globally relevant gold miner.
