A worker winds up a copper rod made from recycled copper at a metal melting facility in Yuexi County, central China’s Anhui Province, Friday, July 11, 2025.
Featured China | Future Publishing | Getty Images
Metal prices plunged across the board on Thursday as investors worried about the impact on the global economy of rising oil prices due to the war between the United States and Iran.
Gold fell nearly 6% and silver fell 8%. Industrial metals such as copper and palladium came under pressure, with losses not limited to these two stocks, which fell 2% and 5.5%, respectively.
The sell-off intensified on Thursday, while gold and silver have fallen since the Iran war began, even though they are considered safe-haven assets. Rising oil prices are raising concerns that inflation will reignite and interest rates will remain high. Higher rates make non-yielding bullion less attractive.
A strong dollar due to rising interest rates is also weighing on gold as it makes metals cheaper.
“The Fed rate cuts that were priced in have taken away the inflation risk, and rising interest rates around the world and rising real rates are weighing on gold,” said Peter Boockvar, chief investment officer at One Point BFG Wealth Partners. The yield on the 10-year US Treasury note briefly exceeded 4.300% on Thursday.
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After February 27, 2026, @GC.1 vs. @SI.1.
Copper and palladium, on the other hand, remained relatively stable after falling at the start of the war.
However, that changed as growth concerns began to weigh on these industrial metals.
recession risk
Industrial metals are being put into practical use. For example, copper is used in everything from electronic equipment to electrical wiring and plumbing systems. A decline in copper prices is usually seen as a sign of slowing economic growth.
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@HG.1 vs @PA.1 chart since February 27, 2026.
The consensus on Wall Street is that the longer the war goes on, the longer oil prices will remain high, changing the spending habits of consumers and businesses, and increasing the risk of a recession.
What traders and investors are talking about is the “demand destruction” phase of the energy shock.
“On the industrial metals side…people are very concerned about recession risk right now,” Boockvar said.
The combination of slowing growth and rising inflation is a “stagflation” scenario. But while investors are starting to trade in “stagflation,” others see that possibility as highly unlikely.
“Oil shocks are unlikely to cause the kind of sustained stagflation seen in the past, particularly in the 1970s,” Ed Yardeni, president of Yardeni Research, said in a note Tuesday, citing the economic impact of the 1973 OPEC embargo. He pointed out that Russia’s invasion of Ukraine in 2022 caused an oil crisis and high inflation, but did not lead to an economic recession.
This is a belief Fed Chairman Jay Powell reiterated at a press conference on Wednesday. “I would like to reserve the term stagflation for more serious situations.”
Boockvar believes the war needs to end to stabilize prices for industrial metals, but said gold is likely to recover as the focus returns to countries’ rising debts and deficits, and that gold typically performs well as a “subsidence trade.” He added that military spending on wars could make these deficits even worse.
And even if stagflation arrives, gold is a play in that environment, Christian Muller-Grissmann, head of asset allocation research at Goldman Sachs, wrote in a note Thursday.
“If the stagflation shock persists, we expect gold prices to be further supported by investor demand for real asset and currency diversification, especially if real yields are falling,” he wrote.
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