Gold Extends Slide as Stronger Dollar and Higher Yields Pressure Prices

Spot gold fell as much as 2% before trimming losses to trade 1% lower at $4,335.97 per ounce. April gold futures were down more than 1% at $4,358.80 per ounce. Spot silver dropped more than 3% to $66.93 per ounce, with silver futures 2.61% lower at $67.54.

Dollar Strength and Yield Moves Undermine Bullion

The U.S. dollar index rose 0.5% on Tuesday, making dollar-priced bullion more expensive for holders of other currencies and dampening demand for gold. The index has strengthened around 3% since the start of the war, adding to pressure on precious metals that had previously benefited from safe-haven flows.

At the same time, U.S. Treasury yields moved higher, further weighing on gold. The yield on the 10-year Treasury climbed about 5 basis points to 4.384%, maintaining the relative attractiveness of interest-bearing assets over non-interest-bearing bullion. Market participants have been reassessing expectations for U.S. monetary policy as persistent inflation reduces the likelihood of aggressive Federal Reserve rate cuts, helping keep yields elevated.

Position Unwinding After Record Highs and Rapid Rally

Spot gold has now lost more than 22% since reaching a record high of $5,594.82 per ounce at the end of January. The metal shed almost 10% last week alone, its worst weekly performance since September 2011. Gold had previously risen over 64% last year, supported by geopolitical uncertainty and structural demand.

Market watchers cited a combination of macroeconomic drivers and positioning-related factors behind the recent sell-off. Rajat Bhattacharya, senior investment specialist at Standard Chartered, noted that although gold initially gained on safe-haven demand at the start of the Iran conflict, prices have since pulled back. He said this pattern often occurs during periods of heightened market stress, as investors raise cash to meet margin calls or take profits where possible, and added that the dollar’s recent strength has also weighed on gold demand.

Zavier Wong, market analyst at eToro, said gold’s earlier surge to record highs was driven less by inflation than by a broader loss of confidence related to fiscal deficits, geopolitical fragmentation, and central banks quietly diversifying away from dollar reserves. Following such a run, Wong indicated that some degree of position unwinding was inevitable, as leveraged funds and institutional investors typically reduce exposure when markets turn volatile.

FAQ

Why are gold prices declining now?
Gold prices are falling as investors unwind positions amid a stronger U.S. dollar, higher Treasury yields, and reassessed expectations for U.S. monetary policy, all of which reduce the relative appeal of non-interest-bearing bullion.

How far has gold fallen from its record high?
Spot gold has declined more than 22% from its record high of $5,594.82 per ounce reached at the end of January.

What role is the U.S. dollar playing in the gold sell-off?
The U.S. dollar index has risen 0.5% on Tuesday and about 3% since the start of the war, making gold more expensive for non-dollar holders and contributing to reduced demand for the metal.

How have silver prices reacted compared with gold?
Spot silver has dropped more than 3% to $66.93 per ounce, and silver futures are down 2.61% at $67.54, indicating a broader pullback across major precious metals.