Gold’s Historic Weekly Plunge Defies Geopolitical Turmoil

Gold has just recorded its most severe weekly decline in over four decades, presenting a paradox to investors. Despite escalating conflict in the Middle East—a condition that typically fuels demand for the haven asset—the LBMA gold price plummeted more than 10% this week. This marks the largest weekly loss since 1983.

A Reversal of Conventional Logic

The mechanics behind the drop upend traditional market wisdom. Ongoing U.S.-Israeli strikes against Iran have destabilized the Strait of Hormuz, sending oil prices soaring over 40% since the war began. Brent Crude now trades above $108 per barrel. This energy shock is reigniting inflationary pressures, compelling the Federal Reserve to maintain a restrictive monetary stance.

This environment is particularly hostile for non-yielding gold, whose appeal hinges on falling real interest rates and a weaker U.S. dollar. Both dynamics are currently moving against it. The February Producer Price Index surged 0.7%, well beyond forecasts. Concurrently, the 10-year Treasury yield jumped to 4.2%, while the Dollar Index climbed toward 99.9. The Fed has scaled back its 2026 rate-cut projections from two to one, and the Fed Funds futures market, as tracked by CME FedWatch, now prices in no cuts at all.

Technical Breakdown and Price Action

The metal began the week trading near $5,024 per ounce. A critical technical breach occurred Wednesday when prices fell below the 50-day moving average at $4,960. The sell-off accelerated Thursday, dragging gold down to $4,700—its lowest point since early February. Spot prices settled between $4,490 and $4,502 by the week’s end.

Should investors sell immediately? Or is it worth buying Goldpreis LBMA?

The downward move was exacerbated by cascading liquidations in the leveraged futures market and profit-taking following a powerful 23% rally between the February low and the March peak.

All eyes are now on the 200-day Exponential Moving Average around $4,200, a level not breached since late 2023. As markets reopen Monday, initial support is seen at $4,576, with the next significant resistance level waiting at $4,881.

Long-Term Bullish Forecasts Remain Unshaken

Notably, major institutional forecasts remain optimistic despite the sharp correction. Both J.P. Morgan and Deutsche Bank have reaffirmed their 2026 price targets, viewing the plunge as a tactical setback within a structural bull trend. J.P. Morgan maintains its objective of $6,300 per ounce, with Deutsche Bank holding at $6,000.

The immediate trajectory for gold may be determined by upcoming U.S. PMI data for March, covering both manufacturing and services sectors. These releases will offer crucial evidence on whether inflationary pressures are beginning to abate or persist. The answer will dictate whether gold stabilizes in the $4,400 range or continues its descent toward the key 200-day moving average.