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Gold and Silver Prices Fall 23% and 44% Despite the US–Iran War and Rising Consumer Price Index
Since reaching their January peaks, the combined market value of gold and silver has shrunk by $1 trillion: on June 5, gold traded at around $4,331 per ounce, while silver traded at around $67.30, even though active geopolitical conflict and above-target inflation traditionally support higher precious metals prices.
Key Takeaways:
- Gold fell 23% from its January 2026 high of $5,608 per ounce to $4,331 on June 5, 2026.
- The Fed under Kevin Warsh and stronger-than-expected May jobs data — 172,000 — increased the likelihood of rate hikes, putting pressure on metal prices.
- Central banks added roughly 19 tonnes of gold in April, but capital outflows from Western countries continued to drag prices lower.
How Far Prices Have Fallen
Gold peaked at $5,608 per ounce in late January 2026 before reversing sharply lower. By June 5, it had fallen about 23% from that record level. Silver’s price correction was steeper: it fell by around 44% from a high above $121 to about $67.30. Spot data on June 5 showed gold at $4,328, with a daily loss of 3.27%. Silver traded at $67.72, down 8.19% from the previous session.
Image source: precious metals prices via kitco.com/price/precious-metals.
Platinum and palladium joined the decline. Platinum fell 6.23% to $1,775. Palladium dropped 6.87% to $1,207.
Why the Classic “Safe Haven” Logic Is No Longer Working
The conflict between the US and Iran disrupted shipping in the Strait of Hormuz, pushed oil prices above $100 per barrel at their peak and helped lift the US Consumer Price Index to 3.8% year-on-year in April 2026. Under standard conditions, that combination of factors would have generated sustained buying demand for gold.
Instead, traders moved in the opposite direction. The same inflation data that should have supported gold strengthened the case for tighter Federal Reserve policy. Higher expected rates increase the opportunity cost of holding a non-yielding asset. Real yields rose. The US dollar strengthened on support from interest-rate differentials, making dollar-denominated gold more expensive for foreign buyers.
“The assets that the whole world buys to protect against war and inflation did the exact opposite of what they were supposed to do,” the Bull Theory account wrote on X on Sunday morning. “On January 29, gold hit a record level of $5,600, rising 31% in just 29 days, adding $9 trillion to its market capitalisation. In the same month, silver hit $121, rising 68% in 29 days, adding $3.5 trillion to its market capitalisation. Every safe-haven buyer was perfectly positioned.”
Bull Theory added:
“Then in February, the US–Iran war escalated, the Strait of Hormuz was closed, oil reached $93, and inflation rose to 3.8%. These were exactly the conditions in which gold and silver should have thrived. Instead, gold collapsed 23% from its peak, wiping out $8 trillion in market value. Silver collapsed 44%, wiping out $3.5 trillion. Both assets are now negative for 2026.”
The Fed Under Warsh and the May Jobs Report
Kevin Warsh was sworn in as Fed chair on May 22. His arrival followed the May jobs report, which showed 172,000 new nonfarm jobs versus a consensus forecast of 85,000. That figure, together with upward data revisions, shifted federal funds futures towards a higher terminal rate and increased the probability of a December rate hike.
The result: metals traders who entered 2026 positioned for rate cuts spent five months unwinding those positions.
Central Banks Buy, Western Investors Sell
The structural factors supporting higher gold prices remain intact. Central banks, led by Poland, China and Uzbekistan, continued net purchases throughout the first quarter of 2026. China resumed buying in April, adding roughly 19 tonnes. Physical silver markets remain tight because of demand from solar panel and electronics manufacturers.
That structural demand was not enough to offset capital outflows from Western investors and speculative deleveraging. The January rally attracted large positions. When expectations for rate cuts weakened, deleveraging and technical breakdowns followed.
What Traders Are Watching
The Federal Open Market Committee (FOMC) will meet on June 16 and 17 for its first meeting under Warsh’s chairmanship. Rates are widely expected to remain unchanged. The dot plot, the Summary of Economic Projections and the tone of Warsh’s press conference will be the key factors to watch closely. A hawkish signal would extend the correction. Any easing of tensions on the Iran front or softer employment data could trigger a move in the opposite direction.
JPMorgan and others have maintained long-term price targets in the $5,000–$6,000 range. Short-term forecasts were revised lower to account for the interest-rate backdrop. Similar to Bitcoin supporters, metals bulls have long argued that the main drivers since 2025, including political uncertainty, dollar dynamics, geopolitics and equity valuations, remain in place despite the pullback.
See also: "Bitcoin Ownership Is Shifting as Hedge Funds Cut Exposure and Banks Increase Holdings"
