Gold drops 2%, silver 3% as US-Iran tensions lift crude oil prices
Synopsis
Gold and silver are buckling under a rare triple pressure: a stronger dollar, US military action against Iran, and a crude oil spike that is keeping inflation — and therefore interest rates — elevated. With gold already more than 15 per cent off its conflict-era peak, the safe-haven trade is losing to the rate-hawkishness trade, and the US-Iran standoff shows no sign of resolution.
Key Takeaways
Spot gold fell nearly 2 per cent to $4,368.99 per ounce on 28 May ; COMEX gold dropped 1.80 per cent to $4,367.90 .
Spot silver slid more than 3 per cent to $71.94 per ounce ; COMEX silver fell 3.56 per cent to $72.22 .
The MCX was closed on Thursday for Eid al-Adha , keeping domestic trade halted.
Crude oil surged more than 3 per cent after Iran's Revolutionary Guards reportedly claimed a strike on a US airbase .
Gold is trading more than 15 per cent below levels seen when the US-Iran conflict first escalated.
Higher-for-longer rate expectations and a stronger US dollar continue to cap any safe-haven recovery in bullion.
Gold and silver prices fell sharply in international markets on Thursday, 28 May, as a stronger US dollar, fresh US military action against Iran, and surging crude oil prices combined to rattle precious metal sentiment. Spot gold slipped nearly 2 per cent to $4,368.99 per ounce, while spot silver tumbled more than 3 per cent to $71.94 per ounce.
Key Price Movements
COMEX gold tracked the decline, trading 1.80 per cent lower at $4,367.90 per ounce. COMEX silver fell a steeper 3.56 per cent to $72.22 per ounce, underperforming gold on the day. On the domestic front, the Multi Commodity Exchange (MCX) remained closed on Thursday on account of Eid al-Adha, keeping Indian traders on the sidelines.
What Is Driving the Selloff
Commodity market experts pointed to deepening uncertainty over US-Iran negotiations as the primary drag on gold. The yellow metal had been trading near the $4,450 per ounce level before sliding for two consecutive sessions, with key disagreements between Washington and Tehran remaining unresolved. Major sticking points include Iran's demand to retain control over the Strait of Hormuz and preserve its nuclear programme, while US President Donald Trump has reiterated that Washington would not accept what he described as a 'bad deal' and has ruled out easing sanctions despite Tehran's calls for financial relief.
Notably, gold is currently trading more than 15 per cent below the levels seen when the conflict initially erupted — a signal that higher-for-longer interest rate expectations are overriding the traditional safe-haven bid.
Crude Oil Surge Adds to Inflation Fears
Crude oil prices rose more than 3 per cent after Iran's Revolutionary Guards reportedly claimed they had targeted a US airbase in retaliation for Washington's military action, intensifying concerns over supply disruptions in the Persian Gulf. 'Rising energy prices are adding to inflation concerns globally, lowering expectations for near-term interest rate cuts from major central banks,' market experts said. A prolonged oil price spike would keep central banks hawkish, which is structurally bearish for non-yielding assets like gold and silver.
Outlook for Precious Metals
Experts cautioned that persistent geopolitical uncertainty, elevated oil prices, and a firmer dollar are likely to keep precious metals volatile in the near term. With the US Fed and other major central banks showing little appetite for rate cuts amid sticky inflation, bullion faces a difficult environment. Markets will closely watch the next round of US-Iran diplomatic talks and any further escalation in the Middle East for directional cues.
Point of View
Because the same conflict is lifting crude oil and, with it, inflation expectations that keep central banks hawkish. Gold's 15 per cent retreat from its conflict-era peak tells you the rate-hawkishness trade is now stronger than the safe-haven trade. The Strait of Hormuz demand from Tehran is the most underreported element of these talks — if Iran follows through on any threat to restrict passage, the oil shock would dwarf current moves and rewrite the commodity calculus entirely.
NationPress
21 Jul 2026
Frequently Asked Questions
Why did gold prices fall today despite rising geopolitical tensions?
Gold fell nearly 2 per cent to $4,368.99 per ounce on 28 May because rising crude oil prices — driven by US-Iran military escalation — are stoking inflation fears, which in turn lower expectations for near-term interest rate cuts. Higher-for-longer rates make non-yielding assets like gold less attractive, overriding the traditional safe-haven demand.
How much did silver prices drop on 28 May 2025?
Spot silver declined more than 3 per cent to $71.94 per ounce, while COMEX silver fell 3.56 per cent to $72.22 per ounce. Silver underperformed gold on the day, reflecting amplified pressure from the industrial demand outlook alongside the macro headwinds.
Why was the MCX closed on Thursday?
The Multi Commodity Exchange (MCX) remained closed on 28 May on account of Eid al-Adha, a public holiday. Domestic commodity traders were therefore unable to participate in Thursday's session.
What are the main sticking points in US-Iran negotiations?
Key disagreements include Iran's demand to retain control over the Strait of Hormuz and preserve its nuclear programme. US President Donald Trump has ruled out easing sanctions and stated Washington would not accept what he called a 'bad deal,' leaving talks at an impasse.
How much has gold fallen from its conflict-era peak?
Gold is currently trading more than 15 per cent below the levels recorded when the US-Iran conflict initially erupted, according to market experts. The decline reflects the dominant influence of interest rate expectations over safe-haven sentiment in the current environment.
