Gold prices fell sharply on Monday as investors pulled back from precious metals and moved toward cash, government bonds, and interest-bearing assets.
Spot gold later traded near $ 4,467 per ounce after falling to an intraday low of $4,097. The selloff followed a rapid change in market expectations after easing fears of wider conflict and growing concern over inflation, bond yields, and central bank policy.
March has become a difficult month for gold and silver after both metals posted strong gains over the past year. The latest move reflects a broader liquidation phase as investors close profitable positions and adjust to a fast-changing macro backdrop.
Gold drops as rate outlook shifts
Gold came under heavy pressure on Monday after falling six percent in one session, following a 10 percent slide last week. The metal is now down nearly 21 percent since the start of March, making the month one of the weakest periods for gold in recent years.
The decline came as markets moved away from expectations of near-term interest rate cuts in the United States. Investors also started to price in the risk of quicker rate increases in parts of Europe and the United Kingdom as energy-driven inflation concerns spread across markets.
Gold often attracts demand during times of geopolitical stress, but it does not pay interest. When bond yields rise and rate expectations move higher, the appeal of holding gold tends to weaken. That pressure became stronger in recent sessions as investors reassessed how central banks may respond to higher oil prices and inflation risks.
The retreat in gold also followed a reversal in war-driven buying. Prices had surged earlier in the month as conflict in the Middle East lifted demand for safe-haven assets. That move began to fade after US President Donald Trump said the United States had held “very good and productive” talks with Iran and had postponed planned strikes on energy infrastructure.
That statement reduced some of the immediate fear surrounding a wider regional escalation. As those concerns eased, traders began to unwind defensive positions in gold and other metals.
Bond yields and liquidity needs add pressure
The rise in US government bond yields added another layer of pressure to the precious metals market. The yield on the 10-year US Treasury rose to 4.421 percennt, up nearly 0.5 percentage points from the start of the month, marking its highest level since the summer of 2025.
Higher bond yields usually increase the opportunity cost of holding assets like gold. Investors can earn stronger returns in fixed-income markets, which often leads to lower demand for non-yielding assets. The stronger yield environment also supported major currencies and weighed on equities, creating a broader shift in portfolio positioning.
Markets then faced another sharp turn after Iran rejected Trump’s account of the situation. In an update shared by The Kobeissi Letter, Iran said there had been no indirect or direct contact with President Trump. The statement also accused Trump of trying to “buy time” in the war, said he withdrew from power plant strikes after Iran’s “firm warning,” and described his comments as “psychological warfare.” Iran also said Hormuz would not return to pre-war conditions as long as that pressure continued.
That response added fresh uncertainty to the market and showed that the earlier relief may have been premature. It also helped explain the sharp swings seen across risk assets, oil, and safe-haven trades during the session as investors reacted to conflicting signals from both sides.
Saxo Bank said the current move in gold does not reflect a collapse in its long-term role. Instead, the bank said the market is dealing with a liquidity-driven selloff. Ole Hansen, Head of Commodity Strategy at Saxo Bank said gold is being sold because it remains one of the few liquid assets that had still been showing gains over the past year.
Moreover, the bank also said the selloff reflects the unwinding of crowded long positions. Gold and silver had both outperformed for months, which left them exposed once investors needed cash and volatility spread across asset classes.
According to the bank, the Middle East war has forced markets to reprice inflation, rates, growth, and liquidity at the same time. That broad shock pushed investors to reduce exposure across many trades, including precious metals.
Silver falls faster as growth worries deepen
Silver also came under heavy pressure and fell more sharply than gold. Analysts linked that move to silver’s greater exposure to industrial demand and its higher price sensitivity during periods of market stress.
Saxo Bank said silver’s downside accelerated after it broke below USD 80, which opened the way toward lower technical support levels. The bank said silver later approached the 0.618 Fibonacci extension near USD 60.80, with the 200-day moving average around USD 57.61 now seen as another level traders may watch.
Month to date, Saxo Bank said gold is down 19.4 percent while silver has fallen 30.9 percent. On a year-to-date basis, gold is down 1.8% and silver is down 8.1 percent. Even after the recent drop, the bank said gold remains up 38.3% over one year, while silver is still up 90.0 percent over the same period.
Those numbers show how strong the earlier rally had been before the current reversal. They also help explain why the liquidation phase has been severe, as traders who held profitable positions rushed to reduce exposure.
Other metals also pulled back as sentiment shifted. Reports on Monday said platinum dropped after gold lost momentum, while oil prices also moved lower after Trump’s remarks on Iran. That wider retreat added to the view that markets were moving away from the panic buying seen earlier in the month.
Analysts say long-term support remains in place
Despite the sharp correction, analysts said the broader case for gold has not disappeared. Central bank demand remains one of the main sources of support, and some market participants still view gold as a hedge against fiscal strain, inflation pressure, and currency weakness.
Jakub Rochlitz, Market Analyst at eToro, said gold is currently facing pressure from two opposing forces.
He said, “Gold is currently caught between two opposing forces. While geopolitical tensions would support demand for safe-haven assets, the inflationary impact of rising energy prices is driving expectations of higher interest rates, which is weighing heavily on gold.”
He also described the current move as a liquidation phase after last year’s strong advance.
“What we are seeing resembles a classic liquidation phase, with investors taking profits after last year’s strong rally and repositioning in response to changing macro conditions,” Rochlitz added.
Saxo Bank also said gold could recover once forced and technical selling begins to fade. The bank pointed to rising fiscal debt concerns, de-dollarisation trends, and stagflation risks as factors that may support demand later. However, it said silver may remain more sensitive to growth concerns in the near term.