This question is drawing significant attention across global markets as investors are being forced to navigate currency volatility, shifting rate expectations, and escalating geopolitical tensions in the Middle East. Despite the intensifying airstrike conflict involving the United States, Israel, and Iran, gold and silver have still posted a sharp pullback.

The main driver has been a stronger U.S. dollar, alongside renewed inflation concerns, which has pushed market focus toward the Federal Reserve’s policy outlook. In addition, shipping disruptions near the Strait of Hormuz have added to uncertainty particularly through their indirect impact on energy prices.

For now, traders are closely monitoring key economic data, oil-price swings, and signals from major central banks to determine the next direction for precious metals.

Why Have Gold and Silver Fallen So Sharply?

During Tuesday’s trading session, gold at one point plunged by nearly $400 per ounce, slipping below the $5,000/oz level equivalent to a roughly 7% intraday decline. Volatility was even more pronounced in silver, which at one stage dropped more than 14%, trading below $78/oz after reaching an intraday high above $91/oz.

This selloff came as the U.S. dollar climbed to its highest level in more than a month, making gold and silver more expensive for investors holding other currencies. At the same time, markets have increased their bets that the Federal Reserve may keep interest rates elevated for longer than previously expected.

In addition, rising oil costs and higher gas-shipping expenses driven by tensions around the Strait of Hormuz have reignited inflation risks, adding pressure on non-yielding assets such as gold and silver.

The Federal Reserve Outlook and the Inflation Focus

Traders now expect the Fed to keep rates unchanged at its two-day meeting ending on March 18. Data from CME Group’s FedWatch tool shows the probability of the Fed holding rates steady into June has risen above 60%, up from below 45% previously.

Surging oil prices and higher gas-transport costs are stoking fears of inflation returning. An official from Iran’s Islamic Revolutionary Guard Corps said the Strait of Hormuz had been closed to maritime traffic, while Iran warned it would open fire on ships attempting to pass through the area.

Meanwhile, Israeli Prime Minister Benjamin Netanyahu said the conflict involving the United States, Israel, and Iran could be prolonged though not necessarily for many years. Together, these factors are lifting inflation expectations and increasing the likelihood that the Fed maintains a tighter monetary stance, which tends to weigh on precious metals.

Technical Analysis: A Correction Scenario Is Returning

From a technical perspective, gold’s failure to break through the key resistance zone of $5,420–$5,450/oz triggered a sharp downside reversal, effectively invalidating the prior short-term bullish setups. This move further reinforces the probability that the market is entering a corrective phase.

Although bullish signals have paused temporarily, on the daily timeframe gold remains above the 50-day moving average. The current trend structure still shows higher highs and higher lows, meaning a bearish reversal has not been clearly confirmed. Only if this key support zone is decisively broken would a deeper downside scenario be truly triggered.

From a wave-structure perspective, gold may have completed wave B near the 5,418 USD/oz peak and is now beginning the decline from B to C. However, as noted above, price would need to break cleanly below the 4,830–4,850 USD/oz support zone to validate this scenario.

If geopolitical developments unexpectedly intensify further and push gold back above 5,420 USD/oz, the market would likely return to the bullish scenario discussed in previous analyses.

Conclusion

The sharp declines in gold and silver despite rising geopolitical risk suggest that markets are currently prioritizing monetary conditions and inflation expectations over the traditional safe-haven narrative. A stronger U.S. dollar and expectations that the Fed will keep rates higher for longer are dominating the short-term direction of precious metals.

In the near term, gold is likely to remain under corrective pressure, but the medium-term uptrend would only be meaningfully broken if key support levels are clearly breached. As a result, the current phase calls for greater caution: investors should closely monitor price reactions at major technical levels, alongside developments in inflation and global monetary policy.

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