Gold prices continued their sharp decline on Tuesday, deepening the precious metal's bear market phase as investors unwound positions in response to a stronger U.S. dollar and elevated Treasury yields [1]. Spot gold dropped 2% before paring losses to 1%, trading at $4,335.97 per ounce, while gold futures for April delivery were down over 1% at $4,358.80 per ounce [1]. Spot silver also experienced significant losses, falling more than 3% to $66.93 per ounce, with futures 2.61% lower at $67.54 [1].
The dollar index rose 0.5% on Tuesday, making dollar-priced bullion less attractive for holders of other currencies [1]. Since the start of the war, the dollar index has strengthened by around 3% [1]. Spot gold has now lost over 22% since reaching its record high of $5,594.82 per ounce at the end of January, including a nearly 10% drop last week—the worst weekly performance since September 2011 [1].
Market watchers attributed the sell-off to a combination of macroeconomic factors and investor positioning. Rajat Bhattacharya, senior investment specialist at Standard Chartered, noted that gold initially benefited from safe haven demand at the onset of the Iran conflict, but prices have since pulled back as investors raise cash to meet margin calls or book profits, with the dollar's strength further weighing on demand [1]. Persistent inflation has led market participants to reassess expectations for U.S. monetary policy, reducing the likelihood of aggressive Federal Reserve rate cuts and keeping Treasury yields higher; the yield on 10-year Treasuries was about 5 basis points higher at 4.384% on Tuesday [1]. Higher yields diminish the appeal of non-interest-bearing assets like gold [1].
Some analysts described the sell-off as a natural correction following an extended rally driven by geopolitical uncertainty and structural demand. Gold rose over 64% last year, with Zavier Wong, market analyst at eToro, stating that the rally was fueled more by a broader loss of confidence—fiscal deficits, geopolitical fragmentation, and central banks diversifying away from dollar reserves—than by inflation alone. Wong added that position unwinding was inevitable after such a run, as leveraged funds and institutional investors tend to reduce exposure during periods of market volatility [1].
CONCLUSION
Gold's steep decline reflects a shift in investor sentiment driven by a stronger dollar, elevated Treasury yields, and reassessment of monetary policy expectations. The sell-off marks a significant correction after last year's rally, with analysts suggesting that further volatility may persist as macroeconomic and geopolitical factors continue to influence the market.