Gold extended a brutal slide on Wednesday, dropping to $4,086.72 per troy ounce — a 4.09% single-day plunge that brought the metal to levels last seen in late November 2025. Silver fell in lockstep, slipping below $65 an ounce to its lowest mark since March 23. The selloff caps a one-month decline of more than 11% for gold, even as the metal remains roughly 22% higher than it was a year ago.
The unraveling comes despite — and partly because of — the very forces that normally send investors stampeding into bullion: a widening Middle East conflict and a fresh uptick in US inflation.
Hot CPI Tightens the Vise
The Bureau of Labor Statistics reported that headline consumer prices rose 4.2% in May, the highest reading since April 2023. Core CPI, which strips out food and energy, climbed to a seven-month high of 2.9%. Both numbers landed close to consensus, but the composition was punishing: surging energy costs tied to the Iran conflict drove the headline jump, and traders quickly recalibrated their Federal Reserve expectations.
A quarter-point Fed rate hike in December is now fully priced in following stronger-than-expected employment data, with traders scaling back any lingering bets on near-term cuts. That repricing has pushed real yields higher — and real yields, not headline inflation, are what gold tracks most closely.
Why Bullion Is Falling During a War
The textbook reaction to escalating geopolitical risk is a flight into gold. This week, the opposite is happening. President Donald Trump declared on Wednesday that Iran will "have to pay the price" for delaying negotiations, and fresh US-Iran strikes have undermined a fragile ceasefire, dimming the prospect of any broader peace agreement.
Yet gold is falling because the Iran shock is feeding straight into oil prices and inflation expectations rather than into safe-haven demand. With the dollar firm and yields rising, gold's traditional crisis premium has been overwhelmed by the math of higher real rates. As one analysis put it, "If markets believe inflation will force central banks to stay tough on rates, real yields can rise, and that tends to push gold prices down."
Silver Caught in the Downdraft
Silver, often more volatile than gold on both the upside and the downside, has been hit harder in percentage terms over the past two weeks. The metal traded near $74 per ounce as recently as May 25 before sliding below $65 on Wednesday, a decline of more than 12%. Industrial demand concerns layered on top of the macro selloff: a stronger dollar and higher rates threaten to slow the manufacturing and solar-panel demand that has underpinned silver's bull run.
What Comes Next
Despite the rout, several Wall Street strategists are sticking with constructive June forecasts. Experts surveyed by CBS News expect gold to trade between $4,400 and $4,800 this month, with a base case of $4,650 to $4,750. More cautious analysts see a range of $4,300 to $4,725 absent a major catalyst.
The catalyst risk cuts both ways. A sharp escalation in the Iran conflict that disrupts oil supply could reignite safe-haven flows and overwhelm the rate-driven headwinds. Conversely, a ceasefire that pulls down oil and inflation expectations would let real yields ease — historically a tailwind for gold. For now, traders are watching every headline out of Washington and Tehran, and every dot on the Fed's projection chart, before stepping back into the metal.
Sources: CBS News, Newsweek, Trading Economics, Fortune, EBC Financial Group, Morningstar, Barchart