Gold and Silver Plunge as 'Debasement Hype' Vanishes Despite Iran War Inflation

GOLD and SILVER PRICES struggled to steady on Thursday after sinking to fresh multi-month lows overnight, down 28% and 49% respectively from this New Year's all-time highs as the European Central Bank raised interest rates for the 21-nation Eurozone amid the inflation spike driven by the US-Israeli war with Iran.

"ECB raises rates to nip war-led inflation in the bud," said a headline at Reuters as crude oil prices rebounded to reverse an earlier drop.

While the weight of betting on Fed Funds futures still says the US central bank won't raise Dollar interest rates until October at the earliest, the Dollar rose against the Euro on the FX market as the ECB's move still put its deposit rate 1.25 points below the Fed's current floor of 3.50%.

Now losing 6.5% from last Friday's finish, gold priced in Dollars today touched $4024 per troy ounce, close to a 7-month low.

Silver prices meantime got as low as $61.50 per ounce, testing the more industrially-useful precious metals crash low from mid-March.

Google search trends for the word 'debasement' are "currently at the lowest reading since Sept 2025," says precious metals strategist Nicky Shiels at Swiss bullion refining and finance group MKS Pamp.

"[So] arguably FOMO inflows are sidelined [because] outside of tracking extremely splintered retail [investment] volumes, the Google search trend for 'debasement' hype is a solid proxy that spiked when gold prices spiked" in October and then New Year.

Giant gold-backed ETF investment fund the SPDR Gold Trust (NYSEArca: GLD) shrank another 0.3% on Wednesday, down to its fewest number of shares in issue since early October.

"Although not substantial," says analysis from French investment bank Natixis, "holders of physically-backed gold ETFs have turned into sellers, supplying the market with almost 35 tonnes of the metal" over the past 4 weeks.

Traders in option contracts on the GLD "sold more [bullish] calls than they bought" on Wednesday, data quoted by CNBC says, "and of the $200 million in options premium traded, $130 million was tied to [bearish] puts.

"Of the top 10 contracts traded, eight were puts, and more than half of the put premium was traded at the ask or above, meaning the contracts were mostly bought."

"There remains also the question of potential central bank gold selling as being a main contender," says Natixis, "but we do not currently have visibility on this."

While the Reserve Bank of India last week denied erroneous analysis from Bloomberg claiming that the RBI sold gold in mid-May, "much of the 15% two-week slide [in March] was caused by central bank gold swaps and sales (notably Turkey) in order to shore up local currencies against a stronger Dollar and higher oil prices," says Natixis.

Gold's latest plunge today put it on track for its 3rd steepest weekly drop of the 2020s to date, beaten by mid-March 2020's Covid crisis plunge of 7.2% and the 9.3% Iran war slump made in the middle of March this year.