Gold Deepens in Bear Market, Selling Continues
Gold prices extended their decline on Tuesday (March 24th) and entered deeper into bear market territory, as investors unwind their positions. The strengthening US dollar and persistently high US government bond yields reduced gold's appeal as a non-yielding asset.
Spot gold fell about 2% before paring its decline to around 1% and trading at $4,335.97 per ounce. Gold futures for April delivery fell more than 1% to $4,358.80 per ounce. Pressure also spread to silver: spot silver fell more than 3% to $66.93 per ounce, while silver futures weakened 2.61% to $67.54.
The strengthening dollar again became a major pressure factor. The dollar index—which measures the greenback's strength against a basket of currencies—rose about 0.5% on Tuesday. A stronger dollar makes USD-denominated commodities, including gold, more expensive for foreign buyers, thus tending to weaken demand.
Overall, spot gold has now fallen more than 22% since hitting a record $5,594.82 per ounce in late January. Last week, gold also plunged nearly 10%, its worst weekly decline since September 2011. Meanwhile, the dollar index has strengthened by about 3% since the war began—adding pressure on the precious metal.
Market participants believe this weakness stems from a combination of macro and positional factors. Rajat Bhattacharya, senior investment specialist at Standard Chartered, said that although gold rose at the start of the Iran conflict due to safe-haven demand, prices have subsequently corrected. He believes this pattern often repeats itself when market stress increases: investors sell assets to raise cash to meet margin calls or simply take profits on positions that are still in the green, while the dollar's strength also suppresses gold demand.
Furthermore, the market is also reassessing expectations for US monetary policy. Remaining stubbornly stubborn inflation reduces the likelihood of aggressive Fed interest rate cuts, so Treasury yields tend to remain high. Higher yields erode gold's appeal because it does not pay interest. The 10-year US government bond yield rose around 5 bps to 4.384% on Tuesday.
Some analysts consider this sell-off a natural correction after a long rally supported by geopolitical uncertainty and structural demand. Last year, gold rose more than 64%. Zavier Wong, a market analyst at eToro, said gold's rally to a record was driven more by a broader "crisis of confidence"—fiscal deficits, geopolitical fragmentation, and central banks quietly diversifying away from dollar reserves—than simply inflation. After such a long rally, unwinding positions is considered inevitable, especially as market volatility returns and leveraged funds and institutions tend to reduce exposure.
Newsmaker's bottom line: gold is being pressured by a combination of a strong dollar, high yields, and unwinding positions. As long as the "higher-for-longer" narrative remains dominant and market volatility forces investors to seek liquidity, gold has the potential to remain unstable, even though it still has a structurally sound long-term demand base.
Source: Newsmaker.id
