Gold extends sharp decline as rate cut hopes fade in March

07:50

By: Dakir Madiha

Gold extends sharp decline as rate cut hopes fade in March

Gold and silver continued to fall at the start of the trading week, extending a multiweek selloff driven by tight US monetary policy, a stronger dollar and renewed inflation concerns linked to rising energy prices amid the Iran conflict.

Gold futures dropped sharply early in the session, adding to losses that have made March 2026 one of the worst months for the metal in decades. Front-month contracts were trading near $4,370 late Sunday, down more than $200 from the previous session. The metal has now lost about 14 percent since the beginning of March after reaching a record high close to $5,608 in January.

The weekly losses are among the steepest in recent history. Market data shows gold is on track for its largest weekly decline since 1983, while silver has fallen even more sharply. Gold dropped nearly 10 percent last week alone, while silver declined by more than 10 percent over the same period and about 21 percent for the month.

The downturn follows US and Israeli strikes on Iran in late February, which pushed crude oil prices higher and reignited inflation fears. Instead of boosting gold as a safe haven, the surge in energy costs led investors to reassess expectations for US interest rate cuts.

The Federal Reserve held rates at 3.50 percent to 3.75 percent at its March meeting, with Chair Jerome Powell signaling that further progress on inflation is required before easing policy. Markets now largely rule out rate cuts in 2026, while some investors are beginning to consider the possibility of further increases.

A stronger US dollar has added pressure, prompting investors to sell gold holdings to cover losses in other assets. This has triggered outflows from gold-backed exchange-traded funds and intensified the downward momentum.

Despite the recent drop, gold remains up about 48 percent over the past year. Major banks continue to project higher prices in the long term, with forecasts around $6,100 to $6,300 per ounce. However, short-term sentiment remains weak as hedge funds and retail investors exit positions built during last year’s rally.

Analysts warn that volatility could persist. Some market participants advise caution, noting that further declines are possible if prices fail to stabilize in the near term.