Metals prices fell sharply across the board on Thursday as investors worried about the impact of rising oil prices due to the U.S.-Iran war on the global economy.
Gold fell almost 6% while Silver had fallen by 8%. The sell-off extended beyond these two values, as is common in industrial metals copper And palladium came under pressure and fell by 2% and 5.5% respectively.
While selling intensified on Thursday, gold and silver have fallen since the start of Iran’s war, despite silver being considered a safe-haven asset. Rising oil prices have raised fears that inflation will rise again and interest rates will rise further. Higher interest rates weaken the attractiveness of gold bullion, which provides no return.
A stronger one dollar Higher interest rates have also weighed on gold as it makes the metal cheaper.
“The risk of inflation, taking away the Fed’s priced-in rate cuts, and global rate hikes and rising real interest rates have been weighing on gold,” said Peter Boockvar, CIO at One Point BFG Wealth Partners. The USA Yield on 10-year government bonds on Thursday it temporarily exceeded 4,300%.
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@GC.1 vs. @SI.1 since February 27, 2026.
Meanwhile, copper and palladium remained relatively stable after declining at the start of the war.
But that has changed as growth concerns begin to weigh on these industrial metals.
Risk of recession
Industrial metals are used practically. For example, copper is found in everything from electronic devices to electrical wiring and plumbing systems. A drop in copper prices is usually viewed by the Street as a sign of slowing economic growth.
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Chart of @HG.1 vs. @PA.1 since February 27, 2026.
The general consensus on Wall Street was that the longer the war lasted, the greater the risk that oil prices would remain high long enough to change consumer and business spending patterns and lead to a recession.
It’s the “demand destruction” phase of an energy shock that traders and investors rave about.
“On the industrial metals side … people are now really concerned about recession risks,” Boockvar said.
And slower growth combined with higher inflation is a “stagflation” scenario. But as investors begin to make “stagflation” trades, others consider the possibility extremely unlikely.
Ed Yardeni, president of Yardeni Research, wrote in a note Tuesday that “oil shocks are less likely to trigger the kind of sustained stagflation seen in the past, particularly in the 1970s,” citing the economic fallout from the 1973 OPEC embargo. He noted that while Russia’s invasion of Ukraine in 2022 caused an oil shock and higher inflation, it did not lead to a recession led.
It’s a belief Fed Chairman Jay Powell reiterated in a news conference on Wednesday. “I would reserve the term stagflation for a much more serious set of circumstances.”
While Boockvar believes the war must end for industrial metals prices to stabilize, he said gold could likely recover as the focus returns to countries’ rising debts and deficits, which gold typically fares well against as a “devaluation trade.” He added that these deficits may only get worse because of military spending on the war.
And even if stagflation occurs, Christian Mueller-Glissmann, head of asset allocation research at Goldman Sachs, wrote in a note Thursday that gold has a role to play in that environment.
“In the event of a prolonged stagflationary shock, particularly if real yields fall, we would expect stronger support for gold prices due to investor demand for real assets and foreign exchange diversification,” he wrote.
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