Why did the conflict environment in Iran lead to a rapid decline in gold and silver?

The war in Iran is keeping energy prices and inflation concerns alive by raising geopolitical risks. However, despite this, investors are moving away from traditional safe havens like gold and silver toward assets that provide higher returns and are easier to liquidate. After reaching a historic peak of 5,602 dollars at the beginning of 2026, gold fell to the 4,100 dollar level in just a few months, a decline of nearly 25 percent.

Throughout 2025, increasing reserve demands from central banks and economic uncertainties had carried gold to a rally of over 60 percent, causing it to break historic records. However, the sharp decline in 2026 was driven by leveraged positions that began to unwind rapidly, particularly in futures markets and exchange-traded funds. Investors gradually offloaded gold and silver due to liquidity needs in the market and the search for higher returns.

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The rise in US Treasury bond yields and the strengthening of the dollar stand out as the primary factors reducing the appeal of precious metals. Meanwhile, rising oil prices and increased inflation expectations due to the tension in Iran have paved the way for markets to price in limited interest rate cuts or additional tightening moves from the US Federal Reserve. This picture created extra pressure on investors as it increased the opportunity cost of holding gold.

The wave of selling, which accelerated due to the shift toward liquidity and margin calls, made the decline in gold even more pronounced and led the correction in the market to be among the sharpest in recent years.

On the silver side, the picture is even more striking compared to gold. Silver, which saw an all-time high of 121 dollars on January 29, fell to 61 dollars with the rapid correction during the year. Currently trading at the 70 dollar level, silver had achieved an impressive rise of 145 percent in 2025, supported particularly by industrial demand. Although demand in the electric vehicle, solar panel, and electronics sectors strengthened silver's fundamentals, it could not escape the decline under the macroeconomic risks of 2026.

Experts state that volatility in gold and silver prices may remain high for some time in the current global financial environment, but that industrial demand will continue to be supportive, especially for silver, in the medium to long term.

News Source: 12punto