- The price of gold fell by around 7% from $4,525.98 to $4,208.36 over the last 24 hours, dragging Bitcoin and major altcoins down with it.
- Tensions in the Middle East conflict escalated as the IRGC threatened to target energy and water facilities in the region amid the USA’s continued attacks and Israel’s positioning to send ground troops into Iran.
Gold continued to plummet from its historic high in January, prompting some analysts to sound the alarm about the possibility of a bearish cycle for the precious metal. The world’s largest asset by market cap’s deep correction dragged Bitcoin (BTC) and major altcoins, as Iran hurled new threats that could further disrupt the global oil supply chain.
Gold Crashes by 7%
Over the last 24 hours heading into 7:00 AM (UTC) on Monday, Tether Gold (XAUt), a digital asset pegged to one troy ounce of gold, fell by around 7% from $4,525.98 to $4,208.36. The figures represented nearly a 25% dip from its all-time high of $5,597.10 in January.
The trend caused Bitcoin (BTC) to slide by approximately 2%, from $69,233.41 to $67,372.87, over the same period. The event also sent ripples through the broader crypto market amid persistently tanking investor sentiment, erasing the significant gains it recorded last week.
Gold and crypto investors alike are worried that their respective markets are heading into a bearish phase.
What is Happening?
Macro events, particularly the renewed escalation of the US-Iran war, serve as key catalysts for the collapse in gold prices. Despite its status as a long-term wealth preservation instrument and safe-haven asset, the precious metal has remained sensitive to market shocks. Bitcoin, dubbed “digital gold” over the years, has exhibited the same behavior.
Without any other factors directly affecting the gold industry itself, analysts turned their blame on the failure of the US to de-escalate tensions in the Middle East. The sinking gold price coincided with the Islamic Revolutionary Guard Corps’ (IRGC) new warning that it will shut down the Strait of Hormuz and target regional energy and water infrastructure if the Americans attack its power plants.
Additionally, Israel’s preparation for ground invasion, based on Al Jazeera reports, is putting strain on the fragile negotiations of the US and Iran, brokered by Qatar, Oman, and other regional actors.
Is Gold Done For?
Peter Schiff, founder of SchiffGold, earlier described the situation as “gold’s worst week since 1983.” However, it’s too early to tell if gold will head into a bear cycle. He believes rising Treasury yields, a weakening labor market, and ballooning housing costs are driving the sell-off.
For Schiff, though, the sharp drop in gold price offers a good entry point for investors. He claimed things will get worse from here as “hotter inflation” looms due to surging oil costs and the USA’s renewed money printing.
