Gold posts largest weekly decline in 43 years, why did safe-haven assets fall first?

This is the 2216th original issue of Plain Talk Blockchain
Author | Cathy
Produced by | Plain Talk Blockchain (ID: hellobtc)

On March 23, Black Monday.

Gold, silver, US stocks, European stocks, copper, aluminum, zinc, tin, Bitcoin—all fell. Not just a little, but in a way that makes you doubt whether your account has been hacked.

The most outrageous is gold.

Middle East at war, the Strait of Hormuz blocked, oil prices soaring to $114, the whole world shouting “World War III”—according to textbooks, gold should surge. But what happened? Spot gold plummeted 10.24% in a week, breaking below $4,500, the worst record in 43 years. On March 23, it even dropped near $4,100, with a daily decline of over 6%. The last time such a crash happened was in 1983.

Safe-haven assets collapsed at the very moment they should have been safe. This is not a joke; it’s the reality of March 2026.

01

A single spark ignited the entire chain

The story begins on February 28.

That day, the US and Israel launched a joint military strike against Iran, codenamed “Operation Epic Fury.” The goal was clear: destroy Iran’s missile and nuclear capabilities. On the first day, the US-Israel coalition used precision-guided strikes to kill about 40 high-ranking Iranian officials, including Supreme Leader Khamenei, crippling Iran’s command system within hours.

But Iran’s retaliation was not conventional—they chose a more deadly move than launching missiles: blocking the Strait of Hormuz.

How important is this strait? About 20%-25% of global oil shipping passes through it. Block it, and it’s like choking the global economy’s air supply. Iran’s Revolutionary Guard began intercepting ships from February 28, and by the second week of March, they had completely sealed the route, trapping large amounts of crude oil in the Persian Gulf.

Meanwhile, Iran launched a retaliatory operation codenamed “True Promise-4,” firing numerous missiles and drones at Israel, the UAE, Saudi Arabia, Qatar, and other countries. Dubai International Airport was hit, and smoke rose near the Burj Khalifa. Analysts warned that if this crisis dragged into mid-year, global food security would face severe challenges.

Brent crude oil shot up to $114.

02

Interest rate dreams shattered, the nightmare of hikes begins

The destructive power of soaring oil prices isn’t just in the price itself but in igniting a word that no one wants to face: stagflation.

Before the war, global investors were still dreaming of “peaking inflation and central banks cutting rates.” But then, February’s PPI data came out—up 3.4% year-over-year, 0.7% month-over-month, far exceeding expectations. Oil’s supply-side shock pulled inflation back into focus.

On March 18, the Federal Reserve’s FOMC meeting kept rates steady at 3.50%-3.75%, but the signals were harsher than a rate hike: PCE inflation expectations were raised from 2.4% to 2.7%, and the dot plot showed several officials believed rate cuts this year were inappropriate. Market expectations for further easing cooled significantly.

Expectations of rate cuts within the year quickly evaporated, and tightening expectations, reflected in rate futures, surged.

Within a week, the market shifted from “two rate cuts this year” to “possibly even hikes.” This 180-degree reversal in expectations was the true trigger for the full-scale crash on March 23.

03

Gold: From “King of Safe Havens” to “Last Cash Machine”

Back to the core question: with such fierce fighting, why did gold not rise but fall?

Simply put, three reasons.

First, interest rates crushed gold.

Gold doesn’t generate income; its only return is price appreciation. When the 10-year US Treasury yield soared 13 basis points to around 4.38% on March 20—hitting a new high since July 2025—and the dollar index temporarily broke above 100 in mid-March, the opportunity cost of holding gold skyrocketed. Market attention shifted from “worrying about war” to “worrying about rate hikes”—when yields become more attractive than safe-haven demand, gold is the first to be abandoned.

Second, the script from 1983 is playing out again.

In March 1983, oil prices collapsed, causing OPEC countries’ cash flow to dry up, forcing them to sell gold reserves for cash, leading to a weekly drop of over $105 in gold prices. Forty-three years later, the story has a different shell: this time, oil prices are rising, but Saudi Arabia and the UAE face a strange problem—they can’t sell their oil. The Strait of Hormuz is blocked, oil is stuck in the Persian Gulf, and export revenues are nearly zero.

But military spending continues. The US military spent $11.3 billion in the first six days alone. Countries sitting on gold mines now have to convert gold into cash to keep operating. Sovereign-level selling pressure is invisible to retail investors but acts like a ceiling, pressing down on gold prices.

Third, gold has become everyone’s “cash machine.”

This is the cruelest layer. In 2025, gold rose 64%, making it one of the best-performing assets of the past year. When on March 23, stock markets, bond markets, and private credit all collapsed, margin calls flooded in, and institutions had few assets to quickly liquidate—gold became that “liquidity reservoir.” Profitable positions were sold first because they could be sold.

This is gold’s fate: in normal times, it’s the crown of safe-haven assets; in a real liquidity crisis, it’s the first to be pawned.

04

$2 trillion private credit, exploded

Gold’s plunge isn’t an isolated event. Behind it, another bigger bomb is ticking: private credit.

In recent years, about $2 trillion of private credit funds flooded into the tech industry, with technology and software being major targets. The logic was simple—software is “light assets, high growth,” lending to them is risk-free.

Until AI arrived.

Meta spends $135 billion annually on AI infrastructure, but what about profits? Still on the way. As Wall Street began questioning AI’s return cycle, software company valuations started collapsing, and private credit collateral shrank. JPMorgan directly downgraded the valuation of software loans and tightened lending.

Panic spread to asset management giants. Blackstone’s flagship fund BCRED was asked by investors to redeem $3.8 billion, accounting for 7.9% of total assets—far exceeding the quarterly 5% redemption limit. Even more severe, Blue Owl announced a permanent suspension of regular redemptions—meaning: money flows in, but don’t expect to get it out.

When private credit doors are welded shut, money can only jump out through the open window of the public markets. Gold, blue-chip stocks, and all liquid assets become scapegoats.

05

Bitcoin: $68,000, stuck in the middle

The crypto market’s performance in this storm can only be described as “awkward.”

Bitcoin fluctuated around $68,000 on March 23. Although it outperformed gold over the week, the narrative of “digital gold” completely failed this week. When liquidity crunches spread from traditional markets, Bitcoin and all risk assets were sold off together. It didn’t become a safe haven or an inflation hedge; it just… fell along with everything else.

Interestingly, the root causes of this crash—war, oil prices, Federal Reserve—are not directly related to the crypto industry. But in the face of systemic risk, all asset classes tend to correlate near 1.

There are no “non-correlated assets,” only assets that haven’t yet reached an extreme.

06

Summary

Q4 2025 GDP has been revised down to 0.7%, and inflation expectations, reignited by soaring oil prices, are spiraling out of control. The Fed is caught between “controlling inflation” and “preventing recession.”

UBS says the long-term logic of gold remains intact. Maybe. But in the short term, as long as the Strait of Hormuz remains blocked and the Fed doesn’t loosen policy, gold will find it hard to escape its “cash machine” fate.

March 2026 teaches the market one thing: in a real crisis, there are no safe assets—only liquidity.
And liquidity, never emotional.