The Iran war has delivered one of the most paradoxical commodity market dynamics in recent memory. While crude oil remains sharply elevated, gold and silver, which were the traditional beneficiaries of geopolitical instability, have suffered brutal selloffs in the last month, eToro analyst for Romania, Bogdan Maioreanu writes.
The element connecting these three commodities is inflation, and it tells a story more nuanced than the simple war-equals-higher-prices narrative.
Crude oil remains the clearest expression of the conflict’s economic weight. Brent crude price surged over 110$ in the beginning of Monday’s session but corrected to around $101 per barrel after President Trump said that the US will postpone the order to attack Iran’s energy infrastructure after what he called “productive conversations” with the country.
Even after the dip, in the past month, the Brent crude oil price surged 41%. That extraordinary rise in prices was triggered by the effective closure of the Strait of Hormuz, the narrow waterway through which roughly 20% of the world’s daily seaborne oil supply passes. This generated a supply crisis and a wave of worries across the globe.
The energy disruption is in part structural, not merely speculative: attacks on Gulf refinery and storage infrastructure have caused some lasting damage and compounded supply fears. On March 2nd, QatarEnergy halted LNG production following an Iranian drone strike, straining the global LNG market, which relies on Qatar for one-fifth of its supply. The head of the International Energy Agency estimates that at least 40 critical energy assets across nine countries in the Middle East have been “severely or very severely damaged,” and this is threatening to keep oil prices higher for longer, even if the war in Iran ends soon.
Gold’s journey through the conflict has been anything but linear. When U.S. and Israeli strikes killed Iran’s Supreme Leader on the last weekend of February, bullion surged 5.2% overnight, briefly testing $5,418 per ounce on March 2nd. Before the conflicts started, J.P. Morgan turned aggressively bullish, projecting gold could reach $6,300 by year-end. The rally, however, proved short-lived. Yesterday, the gold spot price collapsed to $4,135 per ounce, wiping out weeks of geopolitical premium in a matter of hours. Gold lost 15% of its value in the last month. Silver fared even worse, losing almost 20% in the last 30 days.
Instability brings risks, with investors demanding higher premiums. The yield on 10-year US Treasuries has risen by nearly 0.5 percentage points since the start of the month to 4.421%, its highest level since the summer of 2025. Rising rates are putting downward pressure on stocks and strengthening currencies, which in turn devalues assets like gold. In parallel, the market is seeing rapid sell-offs as investors lock in profits from gold’s 66% rally last year. What we are witnessing looks like a classic liquidation event, characterized by outflows from ETFs, forced selling, and investors closing positions to cover losses elsewhere. This shift is temporarily overshadowing the structural support provided by central bank purchases, which have been the cornerstone of the long-term uptrend.
The mechanism linking all three commodities into a bearish feedback loop for precious metals is inflation. Persistently elevated oil prices are driving up costs across the global economy, forcing central banks to delay the rate cuts markets had been counting on. Non-yielding assets like gold and silver become structurally less attractive in a prolonged high-rate environment, and that is precisely the trap the Iran war has set. Oil rises because of the conflict, inflation rises because of oil, rate expectations firm up because of inflation, gold falls because of rising rates, while silver, which has a dual use of safe haven and technical metal, is affected by the prospects of a slowing global economy. The irony is that the very crisis that was supposed to give gold a tailwind has now become its heavy anchor.
The three-way dynamic now hinges on a single variable: how long the conflict lasts. A swift resolution would likely collapse Brent back toward $65, relieve inflation pressure, and potentially rekindle gold’s rally. A prolonged war, however, risks entrenching oil above $100, keeping inflation sticky, and leaving precious metals in an uncomfortable limbo, technically safe havens, practically weighed down by the very crisis they were supposed to benefit from. For now, the Strait of Hormuz holds the fate of all three. Oil is this war’s loudest commodity voice. Brent fell by around 12% on Monday on positive news. This suggests that the market is currently pricing in a higher chance of de-escalation in the conflict than before. But investors are nervous, and any change in news might bring back the large swings in the markets.
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