Gold Declines Sharply

(MENAFN) Gold entered 2026 with solid upward traction, yet the valuable metal experienced a dramatic fall of 11.3% in March. This drop was driven by intricate factors linked to rising tensions in the Middle East, resulting in its most severe monthly downturn since the 2008 global financial crisis.

As the first month of the Middle East conflict concluded, increases in energy costs—spurred by geopolitical uncertainties—continued to intensify inflationary strain. These developments have amplified worries regarding the Federal Reserve’s possible hawkish policy stance.

A stronger US dollar, climbing bond yields, and heightened liquidity demands collectively pushed gold toward its steepest monthly decline in recent times. These financial conditions created additional pressure on the metal’s value.

Ongoing instability in the Middle East has further fueled global inflation concerns and increased the need for liquidity. Consequently, gold prices dropped to $4,099.52 per ounce, marking their lowest level since Nov. 2025.

Higher oil prices have driven bond yields upward, potentially worsening inflationary pressures. At the same time, expectations that the Federal Reserve may halt rate cuts this year, alongside growing demand for the US dollar as a safe-haven asset, have all played a role in gold’s downward movement.

Although financial markets largely anticipate that the Federal Reserve will keep interest rates unchanged this year, the likelihood of rate reductions has mostly diminished, despite some officials issuing dovish remarks.

Additionally, the sale of gold reserves by central banks has been another contributing factor behind the decline in gold prices per ounce.

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