Gold prices are on track for their worst weekly decline in six years as Middle East tensions drive investors away from safe-haven assets. The war has pushed energy prices higher, creating inflationary pressures that reduce expectations for Federal Reserve rate cuts. Gold futures fell sharply this week, breaking below key technical levels that traders had been watching.

Market analysts say the shift reflects changing risk dynamics in global markets. While gold typically benefits from geopolitical uncertainty, the current conflict is driving investors toward oil and other energy commodities instead. The prospect of sustained high energy prices has dampened hopes for aggressive monetary easing, which had previously supported gold prices. Higher interest rates generally make non-yielding assets like gold less attractive.

This downturn marks a significant reversal for gold, which had been rallying on expectations of multiple Fed rate cuts this year. The metal's six-year worst performance highlights how quickly market sentiment can shift when new geopolitical risks emerge. Traders are now reassessing their positions as the conflict's economic implications become clearer, with many reducing exposure to precious metals in favor of energy and industrial commodities.