Gold prices extended their decline on Tuesday, falling deeper into bear market territory as investors continued to unwind positions amid a stronger U.S. dollar and rising Treasury yields.
Spot gold dropped as much as two percent during the session before trimming losses to trade about one percent lower at roughly US$4,336 per ounce. U.S. gold futures for April delivery also declined more than one percent to around US$4,359 per ounce.
The latest slide leaves the precious metal down more than 22 percent from its record high of US$5,594 per ounce reached at the end of January, marking a sharp reversal after a prolonged rally.
Market participants said the sell-off reflects a combination of macroeconomic pressures and profit-taking, as investors reassess their positions following months of strong gains.
A key driver of the decline has been the strengthening of the U.S. dollar. The dollar index, which measures the greenback against a basket of major currencies, rose about 0.5 percent on Tuesday and has gained roughly three percent since the onset of the Middle East conflict.
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A stronger dollar typically weighs on gold prices by making dollar-denominated assets more expensive for holders of other currencies, reducing demand for bullion in global markets.
At the same time, rising U.S. Treasury yields have eroded gold’s appeal as a non-interest-bearing asset. The benchmark 10-year Treasury yield edged higher to around 4.38 percent, as investors scaled back expectations for aggressive interest rate cuts by the Federal Reserve.
Persistent inflation in the United States has reinforced the view that borrowing costs may remain elevated for longer than previously anticipated, supporting yields and further pressuring gold.
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Analysts say the recent downturn also reflects a broader pattern seen during periods of market volatility, where investors liquidate profitable assets to raise cash.
“Although gold initially gained due to safe-haven demand at the start of the conflict, prices have recently pulled back,” an analyst at Standard Chartered said, noting that investors often sell gold to meet margin calls or lock in profits during turbulent market conditions.
The sell-off follows an extended period of strong performance for gold. The metal surged more than 60 percent in 2025, driven by geopolitical tensions, robust central bank buying and concerns over fiscal deficits in major economies.
“After a run like that, some position unwinding was inevitable,” an analyst at eToro said, adding that institutional investors tend to reduce exposure when markets become more volatile.
Other precious metals also came under pressure, with spot silver falling more than three percent to around $67 per ounce, reflecting broader weakness across the sector.
Despite the sharp correction, many analysts maintain a constructive long-term outlook for gold, pointing to underlying structural drivers that continue to support demand.
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Geopolitical uncertainty remains elevated, particularly with ongoing tensions in the Middle East, which historically boost the appeal of safe-haven assets. In addition, central banks — especially in emerging markets — have continued to diversify their reserves, increasing their holdings of gold as a hedge against currency risk.
However, in the near term, gold prices are likely to remain sensitive to developments in U.S. monetary policy and global financial markets.
Any further strengthening of the dollar or sustained rise in Treasury yields could exert additional downward pressure on the metal. Conversely, signs of easing inflation or a shift towards monetary policy loosening could provide support.
Analysts also point to the role of investor positioning in shaping price movements. As leveraged funds and institutional investors adjust their exposure, short-term volatility is likely to persist.
For now, the sharp decline underscores gold’s dual nature — as both a safe-haven asset and a financial instrument influenced by broader market conditions.
While the longer-term case for gold remains intact, the current downturn highlights how quickly sentiment can shift when macroeconomic factors and investor behaviour align against the metal.
