The recent trend in gold prices has been a departure from the metal's traditional role as a safe-haven asset. Despite escalating tensions in the Middle East, investors have not been flocking to gold, and the precious metal has fallen by around 13% since the outbreak of the conflict on February 28. One factor contributing to this trend is the rise in oil prices, which has pushed up inflation expectations and made it less likely for the Federal Reserve to cut interest rates.
The strengthening US dollar has also had a negative impact on gold prices. The dollar's rise has reduced the demand for dollar-denominated assets, including gold, as investors seek safer havens. Additionally, the increased volatility in the financial markets has led to a flight to liquidity, with investors selling their profitable positions to boost their cash reserves.
As a result of these factors, gold prices have fallen by around 6% on Thursday, with silver and bitcoin also experiencing significant declines. However, some market strategists believe that this trend may be short-lived, and that the dollar's rise will eventually subside, allowing gold to regain its safe-haven status.