Dollar Jumps, Gold and Silver Crash as Iran War Hits Stocks, Bonds, Base

SURGING ENERGY prices amid the worsening Middle East war saw gold sink and silver plunge on Tuesday as traders rushed to liquidate stocks, bonds and industrial commodities led by base metals in the face of rising interest rates and a surging US Dollar.

Crude oil hit its highest since mid-2024, costing over $83 per barrel of global benchmark Brent, now showing a year-to-date gain of 37.1%.

Natural gas on Europe's TTF market meantime rose another 27.8% in Euro terms after jumping 39.2% on Monday following the weekend's US-Israeli strikes on Iran, which killed the theocratic dictatorship's supreme leader Ali Khamenei and provoked region-wide retaliation by Tehran.

Japan's Nikkei dropped 3.0%, China's CSI300 fell 1.5%, Germany's Dax lost 4.2%, London's FTSE All-Share sank 3.3% and New York's S&P500 lost 2.2%.

The Dollar meantime rose 1.1% on its DXY index against the rest of the world's rich-economy currencies, the sharpest gain since May last year.

With gold and silver already slipping as oil jumped yesterday, that trimmed the volatility and high-low losses for gold and silver investors trading in Euros, UK Pounds and other non-Dollar currencies.

The MSCI World Index of rich-economy stock markets lost over 2.7% by mid-morning in New York with its worst 1-day drop since last June.

Government bonds also fell everywhere, driving longer-term borrowing costs higher in the face of fuel-led inflation fears.

So far this week, the yield demanded by buyers of 10-year US Treasury bonds has risen 0.13 percentage points, the sharpest 2-session rise in 9 months.

With base metal nickel down 3.5% and copper off 4.5% in Dollar terms from Friday's close, silver dropped through $80 per Troy ounce, down as much as 19.0% from Monday morning's 4-week high at a price first reached during China's chaotic Christmas trading.

Gold prices first reached today's level 1 month later, rising through $5000 per Troy ounce on January 25th, and spiking near $5600 gold 4 days later.

"Gold prices fell and silver crashed as traders raised cash," says the Economic Times of India.

"A stronger Dollar weakens demand for gold," reckons Live Mint.

"Moreover, fading bets of US Fed rate cuts are also dragging gold down."

"The potential for rising interest rates have dampened the appeal of non-yielding assets, like silver," agrees Fast Company.

"Profit taking is also likely at play."