Gold extends selloff even amid Middle East risks

Today’s headlines

What’s happening: Gold prices traded lower this morning, even as the US-Iran war showed little signs of easing.

What happened: The yellow metal extended its selloff into a fourth week as the ongoing Middle East conflict raised inflation concerns.

Major economies are also under pressure to increase liquidity by selling gold.

Why it matters: US President Donald Trump warned to strikes power plants in Iran in case the Strait of Hormuz remains closed. Iran in turn threatened to hit major US and Israeli assets if it faces any strike on its energy facilities.

Last week, Iran conducted missile strikes on a Qatar facility, which houses the world’s largest LNG (liquified natural gas) export plant, after Israel struck Iran’s Asaluyeh refinery and the South Pars gas field.

Gold prices fell around 10% last week as higher crude oil prices raised inflation risks, which resulted in investors pricing in an extended pause in interest rate cuts or even hikes by key central banks.

Last week, the US Federal Reserve, Bank of England, European Central Bank and Bank of Japan kept their interest rates unchanged but signalled they were ready to tighten monetary policy in case inflationary pressures continue.

Markets now widely expect the US Federal Reserve to hike interest rates toward the end of the year.

Although gold is generally viewed as a hedge against ⁠inflation and geopolitical tensions, higher interest rates negatively impact the appeal of the non-yielding bullion.

Strength in the US dollar exerted further pressure on gold prices, as a higher greenback makes metals more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, remained above 99.5 this morning.

Spot prices for gold dipped around 1.8% to $4,409.43 an ounce this morning.

In other metals trading, silver tumbled 1.1% to trade at $67.0390 and platinum declined around 0.8% to $1,910.86. Palladium bucked the trend, gaining about 2% to $1,435.97.

What to watch: Investors will keep an eye on the ongoing Middle East war, which is expected to significantly impact gold prices ahead.

Data on Chicago Fed National Activity Index (1630 UAE Time) and construction spending (1800 UAE Time) will be released by the US today. The Chicago Fed National Activity Index, which surged to +0.18 in January from -0.21 in the previous month, is expected to rise to +0.27 in February. Analysts expect construction spending in the US to rise by 0.1% in January following 0.3% growth in December.

The markets today

European stocks in focus today ahead of consumer confidence data

Context: Equity markets in Europe fell on Friday as investors continued monitoring the impact of the ongoing Middle East conflict.

Details: Israel claimed that it had killed two senior officials of the Iranian security force, which triggered fears of fresh retaliation by Tehran. The US said it would send three warships and around 2,500 more marines to the Middle East.

Meanwhile, the European Central Bank kept its interest rates unchanged, but increased its inflation forecast and slashed growth projections due to the Middle East situation. Policymakers also sent hawkish signals, which raised speculations of at least two rate hikes in 2026.

Data released recently showed Eurozone’s trade deficit expanded to €1.9 billion in January from €1.4 billion in the year-ago period. The figure missed market estimates of a surplus of €12.8 billion. The Eurozone’s current account surplus climbed to €12.98 billion in January from €3.09 billion in the year-ago month.

Shares of ASML and SAP fell more than 3% each on Friday, tracking the plunge in the global tech sector. Banking stocks also traded sharply lower amid a further decline in sovereign bonds, which weighed on balance sheets of key lenders and sent shares of UniCredit, BNP Paribas and Nordea lower.

The STOXX Europe 600 Index fell 1.78% to close at 573.28 on Friday, while London’s FTSE 100 declined 1.44% to 9,918.33. Germany’s DAX 40 lost 2.01% to settle at 22,380.19, while France’s CAC 40 dipped 1.82% to 7,665.62.

The EUR/USD pair fell around 0.2% to 1.1545 this morning, while the EUR/GBP forex pair slipped 0.1% to trade at 0.8669.

What to watch: Investors await the release of economic data on consumer confidence (1900 UAE Time) from the Eurozone today. Eurozone’s consumer confidence, which rose slightly to -12.2 in February, is expected to decline to -15 in March.

Other Markets: US trading indices closed lower on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.96%, 1.51% and 1.88%, respectively.

The news shaping the markets

Ukraine’s President Volodymyr Zelenskyy said that Russia’s army was looking to intensify attacks on the front. The news sent the USD/RUB pair lower in forex trading this morning.

Argentina’s retail sales jumped 20.7% year-over-year to ARS 512,721.5 million in January, accelerating from 16.1% growth in the previous month. Retail sales recording the sharpest surge since August 2025 exerted pressure on the USD/ARS forex pair.

Canada’s new housing prices rose 0.3% in February following a 0.4% decline in the previous month. The latest reading topping market estimates of a 0.3% decline sent the USD/CAD pair lower in forex trading this morning.

India’s infrastructure output surged by 2.3% year-on-year in February, down from 4.7% growth in the previous month, which lent support to the USD/INR forex pair.

China’s foreign direct investment contracted by 5.7% year-over-year to 161.45 billion yuan in January-February, which sent the USD/CNY pair higher in forex trading this morning.

What else to watch today

Turkey’s tourist arrivals (1200 UAE Time), foreign exchange reserves (1530 UAE Time) and central government debt (1830 UAE Time), Spain’s balance of trade (1300 UAE Time) as well as Mexico’s retail sales (1600 UAE Time).