Gold continues to lose value as geopolitical developments in the Middle East and these developments increase hawkish expectations regarding the US Federal Reserve (FED). Although the war, which started in February after the attacks of the USA and Israel against Iran and Iran’s response to these attacks, has recently given way to a ceasefire, geopolitical tensions continue because the parties cannot come to an agreement.
While the developments led to increased volatility in the market, energy prices increased after Iran closed the Strait of Hormuz. The world’s largest central banks had to reconsider their expectations regarding interest policies. WILL FED INCREASE INTEREST RATES? While it was expected that the FED would cut interest rates before the war in the Middle East, this expectation disappeared due to the war. If inflationary pressures continue, pricing in money markets predicts that the FED may increase interest rates by the end of the year.
Changing expectations regarding the FED’s policy caused precious metals, especially gold, to lose value. In this context, ounce gold rose in January and February due to the tension with European countries due to the US administration’s attempt to purchase Greenland, uncertainties regarding trade policies, high valuation concerns in technology and artificial intelligence companies, and strong demand from central banks.
IT BROKE A RECORD IN JANUARY Starting 2026 at $4313, an ounce of gold broke a historical record by testing $5,600 in January. An ounce of gold increased by 12.4 percent in January and finished the month at 4 thousand 849 dollars. Continuing its rise in February, the ounce of gold gained 8.5 percent in value this month and reached 5 thousand 263 dollars. However, due to the war that started in the Middle East, the ounce of gold began to lose value.
An ounce of gold, which dropped to $4,099 in March, completed the month at $4,667 with a loss of 11.33 percent. While the continuation of the war in the Middle East increased the pressure on ounce gold, the decline in March was the sharpest decline since the 2008 crisis. Additionally, an ounce of gold lost 1 percent of its value in April. Last month, it decreased by 1.77 percent and completed May at 4 thousand 540 dollars.
Thus, ounces of gold lost value for three consecutive months. SILVER ALSO LOST VALUE The developments caused silver to also lose value. Silver, which plays an important role in the industrial sector, especially in solar panel production, also lost value in this process. Silver, which started 2026 at $71, broke a record by rising to $121.7 in January. It completed the first month of the year at $83.3 with an increase of 17.2 percent.
An ounce of silver continued its rise in February and closed the second month of the year at $93.8 with an increase of 12.6 percent. IT INCREASED BY 2.1 PERCENT IN MAY However, as silver prices fell sharply due to the war in the Middle East, it fell to 61 dollars in March. For this reason, ounce silver, which closed March at 75.1 dollars with a 19.9 percent decrease, closed at 73.7 dollars with a 1.8 percent decrease in April.
Ounce silver recovered again last month, rising by 2.1 percent and reaching $75.3. While experts state that ounce silver has ended its two-month series of declines, they predict that the developments in the Middle East will determine the direction of gold and silver.
Comments
You can write your views about this story. Comments may be moderated according to site settings.