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It's been some time since we did a weekly update, so I want to take a step back and look at what's been happening with gold and silver since the start of the month.

The gold price briefly broke US$5,400 per ounce as March began, responding to attacks on Iran from the US and Israel. Since then it's had ups and downs, but overall has traded lower.

Silver performed much the same during that period, with the price jumping past US$96 per ounce when the war first broke out and then declining to the current US$80 level.

Both precious metals are typically seen as safe havens during times of turmoil, so why haven't prices stayed high? I was at the Prospectors & Developers Association of Canada (PDAC) convention during the initial days of the war, and the experts I heard from emphasized that while gold and silver tend to spike initially in times of conflict, their gains often don't last long.

Here's Adrian Day of Adrian Day Asset Management explaining that trend:

"Geopolitical events typically have a very short-lived spike. The classic case would be the Russian invasion of Ukraine, where the gold price moved up meaningfully in the two, three, four weeks ahead, as Russia was massing troops on the border, and all the speculation was about a war. But the day those tanks crossed the border, gold peaked, and within three weeks it was back to where it was before it started.

Aside from that, precious metals prices are being dampened by strength in the US dollar, which this week reached its highest point in 2026. That strength appears to have two main factors behind it.

The first is that the vast majority of global oil trade is conducted in US dollars, and the second is that the US is the world's top oil producer. Prices for the commodity surged this week as tensions in the Middle East escalated, rising past US$100 per barrel and into triple-digit territory.

At this point, it's impossible to say how the situation will play out, but market watchers are saying that it really depends on how long the Iran war lasts.

I also heard from Rick Rule of Rule Investment Media at PDAC, and he put it this way:

"The fact that oil can't transit the Strait of Hormuz, where approximately 50 percent of the world's export crude — not total crude, but export crude — transits, is a problem. And if the Iranians are able to continue to manage a closure in the strait, the world oil markets will feel that, and they'll feel it in spades. There's plenty of oil around for the next three weeks, but the anticipation of what might happen four weeks out, provided that the closure holds, (is a) very different story."

For now, oil supply is looking uncertain, with Iran's new supreme leader saying in his first public statement that the Strait of Hormuz must remain closed "as a tool to pressure the enemy."

One spokesperson from Iran reportedly said US$200 oil could be in the cards in the future — that would be well above the oil price record of about US$147 set in 2008.

Oil's price volatility comes despite stabilizing efforts from nations around the world — midway through the week, the International Energy Agency said its 32 member countries had agreed to release 400 million barrels of oil from their reserves. According to the organization, that's the largest-ever oil stock release in its history, and only the sixth since it was established in 1974.

Going back to gold, it's worth noting that this week also brought the release of the latest US consumer price index (CPI) data. It shows that the all-items index rose 2.4 percent year-on-year in February, in line with analysts' expectations, while core CPI, which excludes the volatile food and energy categories, was up 2.5 percent over the same length of time.

The US Federal Reserve looks at CPI when it makes interest rate decisions, but its preferred inflation gauge is the personal consumption expenditures (PCE) price index. January numbers came out on Friday (March 13), showing an increase of 2.8 percent year-on-year; core PCE was up 3.1 percent.

Ahead of the PCE data, analysts were suggesting that it would come in higher than CPI, continuing an ongoing move in that direction. But also in question is how higher oil price levels will impact inflation in the months to come — headlines about stagflation, which is characterized by high prices, high unemployment and slow economic growth — are already proliferating.

The Fed's next meeting is scheduled to run from March 17 to 18, and currently CME Group's (NASDAQ:CME) FedWatch tool shows that the central bank is widely anticipated to hold steady this time around. We'll review what happens in next week's update.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

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