Gold began 2026 with strong momentum, but the precious metal plummeted 11.3% in March due to complex dynamics triggered by tensions in the Middle East, marking its sharpest monthly decline since the 2008 global financial crisis.
Gold began the year with a bang, rising 12.4 percent in January, its best monthly performance since November 2009, and 8.9 percent in February, giving it a seven-month streak for the first time in 53 years.
Strengthening the U.S. dollar, rising bond yields, and liquidity needs sent gold to its steepest monthly drop last month.
Escalating tensions in the Middle East continue to stoke global inflation risks and liquidity needs, with gold falling to $4,099.52 per ounce, its lowest since November 2025.
Rising bond yields due to higher oil prices, potentially intensifying inflationary pressures, expectations that the Fed will stop cutting rates this year, and increasing demand for the US dollar as a safe haven contributed to gold’s decline.
Financial markets still widely expect the Fed to maintain its rates this year, but the probability of rate cuts has largely been phased out despite some officials sending dovish signals.
Central banks’ selling of gold also contributed to the decline in the price of gold per ounce.
Ole Hansen, head of commodity strategy at Saxo Capital, said gold suffered due to a combination of strong macroeconomic forces at play, temporarily weakening its traditional safe-haven feature, as investors flocked to greenbacks.
He added that gold typically behaves more like a source of liquidity in such turbulent times instead of a safe-haven asset, so investors reduce their positions to offset losses in other areas.
