Gold, Silver Slide Amid US-Iran Escalation: Why Citi Sees Further Downside

Gold and silver prices tumbled more than 2% in overnight trading on Tuesday as the United States launched fresh military strikes against Iran, dashing hopes for a diplomatic resolution and fueling risk-off sentiment across markets.

Spot gold fell below $4,200 an ounce, its lowest since late March, while spot silver slipped under the key $64-an-ounce level. The selloff came despite the escalation, which traditionally boosts safe-haven demand. Analysts at Citi warned that further downside is likely, citing the breakdown of peace talks and the potential for a prolonged conflict that could strengthen the US dollar and weigh on precious metals. For gold and silver traders, the moves highlight the complex interplay between geopolitical risk and broader market dynamics. Traders can track real-time price action on NowPrice's live gold dashboard to stay ahead of intraday volatility.

The US Central Command said the strikes were ordered by President Donald Trump in retaliation for the downing of an American Apache helicopter near the Strait of Hormuz, a critical chokepoint for global oil shipments. Oil prices climbed on the news, adding to inflationary pressures that could influence central bank policy. The breakdown in US-Iran relations removes a key source of uncertainty that had previously supported gold prices on hopes of de-escalation. With diplomatic channels now closed, markets are pricing in a higher risk premium, though gold's failure to rally suggests other factors—such as a stronger dollar and rising real yields—are dominating.

Looking ahead, traders should monitor any further military developments in the Middle East, as well as US economic data that could shift rate expectations. The upcoming Federal Reserve meeting and inflation readings will be critical in determining whether gold can reclaim the $4,200 level or extend losses. Citi's bearish outlook adds weight to the view that precious metals may face headwinds in the near term, especially if the dollar continues to strengthen on safe-haven flows.