Gold plunges to 4-month low, rand weakens as markets tremble

Metal falls more than 8% to $4100 per ounce, underscoring sell-off of safe-haven asset

- SIPHELELE DLUDLA

WHILE gold typically benefits from geopolitical uncertainty, the current environment over the war in Iran has instead fuelled inflation concerns due to surging oil prices and supply chain disruptions.

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GOLD prices have come under intense pressure amid escalating geopolitical tensions in the Middle East, while the South African rand has weakened sharply as global investors retreat to safer assets.

The precious metal fell more than 8% on Monday to around $4100 per ounce, marking its weakest level in four months. This extends a broader decline of over 20% since the start of the year, underscoring the scale of the selloff in what is traditionally viewed as a safe-haven asset.

Market analysts point to a shift in investor sentiment as the primary driver. While gold typically benefits from geopolitical uncertainty, the current environment over the war in Iran has instead fuelled inflation concerns due to surging oil prices and supply chain disruptions.

This has led to expectations of tighter monetary policy globally, reducing the appeal of nonyielding assets like gold.

Last week alone, gold dropped more than 10% as oil prices surged, intensifying fears of persistent inflation.

Investors are increasingly betting that major central banks will keep interest rates higher for longer, or even raise them further.