Gold and silver fall despite inflation and war in the Middle East

Usually, when the guns are roaring and inflation is racing, gold and silver advance like protected kings on the global financial stage. This time, the script seems to have been rewritten by an invisible hand. Despite the tensions between Iran and the United States, despite the surge in oil prices and despite still high prices, the two precious metals are falling sharply, leaving investors and analysts facing a confusing position to say the least.

When traditional shelters suddenly abandon their role

Since January, gold has lost about 23% of its value after peaking at $5,608 per ounce. Silver suffered an even sharper correction, falling 44% from a peak above $121. However, the historic ingredients of a rally were very present. The war between Iran and the United States has disrupted the Strait of Hormuz. Oil has exceeded $90. US inflation reached 3.8%.

Bull Theory sums up this anomaly perfectly:

The assets the whole world is buying to protect against war and inflation have done the exact opposite of what they were supposed to do. Every safe haven buyer was perfectly positioned.

Bull Theory

For several observers, the problem no longer comes from geopolitics. The market now seems to fear interest rates more than missiles. Like in a game of chess where the queen becomes vulnerable, gold momentarily loses its automatic shelter status.

Kevin Warsh shakes up the calculations of the gold market

The real turning point came from the United States. In May, the American economy created 172,000 jobs compared to only 85,000 expected. This report completely changed monetary expectations.

Kevin Warsh, installed as head of the Fed on May 22, inherits a particularly complex chessboard. Markets now expect a rate hike probability of up to 72% before the end of the year according to FedWatch.

Reuters reports the words of Kelvin Wong:

It's all about the aggressive shift that markets are starting to price into Fed futures. Higher bond yields are also putting additional pressure on gold.

Reuters

As a result, bond yields rise and strengthen the dollar. Gold, which produces no returns, becomes less competitive. Several market participants even believe that investors sell their metals to quickly obtain liquidity.

Others speak of a massive repositioning towards sectors linked to artificial intelligence, today considered the new locomotives of global capital.

Liquidity, bitcoin and markets: the real fight is happening elsewhere

This correction goes far beyond the precious metals market. On Friday, all financial assets faltered. The S&P 500 lost nearly $2,000 billion in capitalization in a single session. AI-related stocks wiped out more than $1 trillion.

Bitcoin has also come under intense pressure. Several analysts emphasize that investors are now looking for liquidity above all else. The logic is more like a surgical operation than a simple portfolio arbitrage.

Astik Mondal summarizes this idea : “ When the assets designed to protect you fail in precisely this scenario, it's not the coverage that's broken. It's the playbook that is. »

The markets thus seem to rewrite their rules. Between giant IPO plans, AI funding needs, and expectations of higher rates, every coin is changing positions at high speed.

The figures that summarize the earthquake

• Gold down about 23% since January 2026;
• Silver down spectacular 44% from its peak;
• American inflation maintained at around 3.8% over one year;
• American employment report: 172,000 creations against 85,000 expected;
• BTC price at time of writing: $62,783.

Gold and silver are therefore no longer the only ones to falter. On the crypto market, bitcoin has also just erased all of the gains accumulated since the re-election of Donald Trump. When safe havens stumble and the queen of cryptos retreats, the entire compass of investors seems to lose direction.