Gold has dropped more than 20% from its January record after a fresh round of U.S.-Iran attacks over the weekend, and hawkish Fed commentary now threatens to keep pressure on the metal. Some longtime holders who sold near the top say they are relieved they did.
Gold is down more than 20% from its January record high of $5,318 a troy ounce, sliding 1.2% Monday to $4,055 after the U.S. and Iran traded a fresh round of attacks over the weekend. The retreat has turned some faithful holders into sellers.
Stu Bradley, an 83-year-old retired financial adviser in Michigan, sold part of his position when gold was rallying above $5,000 an ounce, doubtful prices could climb much higher in the near term. He still holds 10% of his portfolio in gold and silver.
The retreat has spread across the precious metals complex. The biggest gold ETF, GLD, is down 25% from January's all-time closing high. Silver, a more volatile haven, has tumbled 49% from its record of $115 a troy ounce reached early this year.
The weekend fighting rippled through other markets. Oil prices gained and the tech-heavy Nasdaq composite fell about 1.3%. On FXStreet's read of the session, the U.S. crude benchmark WTI rose nearly 6% to $75.70 as traders weighed a possible supply disruption near the Strait of Hormuz.
Investors have worried that the war with Iran could drive up energy prices and inflation, which in turn could lead the Federal Reserve to keep interest rates elevated. That fear sharpened after remarks from Fed Governor Christopher Waller.
According to FXStreet, Waller said a high core inflation reading "would force near-term consideration of a rate hike". Higher rates tend to weigh on gold, which pays no yield, so the prospect removes one of the metal's main supports just as its haven appeal is being tested.
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