Gold Prices Slide Sharply, Set for Biggest Monthly Drop Since 2008

Gold prices are on track to post their steepest monthly decline in over 17 years, as investors increasingly turn to the US dollar as their preferred safe-haven asset.

Globally, bullion has dropped more than 13% this month, marking its sharpest fall since 2008. Despite still being up nearly 5% for the current quarter after reaching a record high of $5,594.82 on January 29, gold has now corrected significantly—falling nearly 19% from its peak.

Why Gold Is Falling

Traditionally viewed as a hedge against inflation and uncertainty, gold is currently under pressure due to shifting global financial dynamics. The ongoing geopolitical tensions in West Asia, particularly involving the United States, Israel, and Iran, have increased concerns about rising inflation.

These concerns have, in turn, strengthened expectations of tighter monetary policies, including potential interest rate hikes. Higher interest rates tend to reduce the appeal of non-yielding assets like gold, prompting investors to move their funds elsewhere.

US Dollar Gains Momentum

One of the key factors behind gold’s decline is the strengthening of the US dollar. The US dollar index recently touched its highest level since May last year, rising nearly 3% during March—its strongest monthly performance since July.

A stronger dollar typically makes gold more expensive for investors holding other currencies, thereby reducing demand.

Impact of Oil and Global Conflict

The geopolitical situation has also played a significant role. Iran’s response to US-Israeli actions, including disruptions near the Strait of Hormuz—a critical oil supply route—has pushed energy prices higher.

Elevated oil prices have fueled inflation concerns, further supporting expectations of rate hikes. Analysts suggest that continued volatility in oil markets could keep gold under pressure in the near term.

Market Outlook

Despite the recent decline, some analysts remain optimistic about gold’s long-term prospects. Goldman Sachs, for instance, expects prices to recover and reach around $5,400 per troy ounce by the end of the year.

This outlook is supported by ongoing central bank diversification and the possibility of monetary easing by the Federal Reserve later in the year.

Gold Prices in India

In India, gold prices remained largely stable on Tuesday, holding steady compared to the previous session across major cities.

However, minor variations were observed, with cities like Noida and Chennai recording slightly higher prices than Delhi and Bengaluru.