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Gold has experienced dramatic swings recently, hitting a record high of US$5,417 per ounce on 3 March 2026 before plunging over 20% to around US$4,410 by late March — erasing all year-to-date gains in one of its steepest weekly declines in decades.
What triggered the sell-off?
The conflict began when US and Israeli forces struck Iran on 28 February. While gold initially rallied on safe-haven demand, market focus quickly shifted to inflation and interest rates. The war pushed Brent crude above US$112 — up 40% since hostilities began — fuelling inflation fears that have kept the Federal Reserve hawkish. With the Fed holding rates at 3.5–3.75% and signalling only one cut in 2026 (markets now price in none), rising bond yields and a stronger US dollar weighed heavily on gold. A cascade of forced selling accelerated the drop once prices broke below the psychologically important US$5,000 level.
What supports gold longer-term?
Despite the pullback, structural demand remains intact. Gold ETFs recorded their ninth consecutive month of inflows in February, with US$5.3 billion added and total holdings reaching a record 4,171 tonnes. Central banks continued buying, with the buyer base widening to include Malaysia, South Korea, and Indonesia. China extended its purchasing streak to 15 consecutive months.
Key technical level to watch: US$4,066–4,090, where the 200-day moving average sits. A break below could see prices test US$3,500.
The recommendation is to treat gold as a long-term diversifier (5–10% allocation), building exposure gradually through dollar-cost averaging rather than timing the market.
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