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(Bloomberg) -- Gold more than wiped out this year’s gains, falling for a ninth day as the war in the Middle East added inflationary risk and raised expectations for higher interest rates. Silver tumbled more than 10% at one point.

Spot gold plunged as much as 8.8% to near $4,100 an ounce. Since the conflict began, surging energy prices have raised expectations for rate hikes by the US Federal Reserve and other central banks. This is a headwind for non-yielding gold, which has just posted its biggest weekly drop since 1983.

“Gold has a liquidity issue,” said Johan Jooste, chief executive officer of Pangaea Wealth AG. The rapid selloff was driven by investors’ need to raise cash, and there would be further downside risk for bullion if the war continued to escalate, he said.

Over the weekend, US President Donald Trump gave Iran a two-day deadline to reopen the Strait of Hormuz or have its power plants bombed. Iran countered that it would close the strategic waterway “completely” and target energy, information technology and desalination infrastructure if its power facilities come under attack. Trump’s ultimatum came at 7:44 p.m. New York time on Saturday.

Selloffs have deepened across various types of gold assets. The aggregate open interest for gold futures on Comex has plunged to the lowest level since 2018, showing the wash-out of speculative positions. Holdings in gold-backed exchange-traded funds — a popular investment method for institutional and retail investors — have also flipped to a net outflow of around 11 tons since the start of this year.

“The magnitude of gold’s selloff is not unprecedented, but the pace of the selloff has been much quicker than on many historical occasions,” said Wayne Gordon, an investment adviser at the wealth-management unit of UBS Group AG.

As gold plummeted in exceptionally volatile trading, crude fluctuated near the highest close since mid-2022 and equity markets were also difficult to predict. In the three weeks since the war began on Feb. 28, bullion’s decline has been driven partly by forced selling as investors seek to cover losses elsewhere in their portfolios. The metal ended last year at $4,319.37 an ounce and spiked to an all-time high above $5,595 an ounce in late January.