The gold market is currently experiencing a significant correction after a record-breaking run. Gold has dropped roughly 18.5% from its January 28 peak of $5,589 to a March low of $4,551. The sell-off has lasted seven consecutive sessions, the longest streak since 2023.
While the FED held rates steady (3.5%-3.75%) on March 18, their tone was unexpectedly aggressive. Jerome Powell signaled that near-term rate cuts are unlikely, with only one cut projected for all of 2026. Usually, war drives investors toward gold; however, the conflict with Iran has spiked oil prices, which fuels inflation.
This forces the Fed to keep interest rates high, making non-yielding gold less attractive than cash or bonds. Global capital is currently flowing into the dollar rather than gold. Because the “macro tape” favors high rates and a strong dollar, gold prices are being pushed down. During broad market volatility, investors are also selling gold to raise cash.
Following a massive 65% surge in 2025, many investors are simply locking in gains from the previous year’s rally. Meanwhile, global banks continue to buy gold. The trend away from the USD and rising US fiscal deficits provide a long-term floor for the prices. Gold has survived sharper drops before, and the core reasons for its 2025 rally have not fundamentally changed.