Gold retreats to $4,600 after its worst monthly drop since 2008

Thursday 02 April 2026 - 10:50

By: Dakir Madiha

Gold retreats to $4,600 after its worst monthly drop since 2008

Gold has pulled back sharply from the records it set earlier this year, falling roughly 10 percent to around $4,600 as of April 1, 2026, under pressure from a hawkish shift in Federal Reserve expectations and a strengthening U.S. dollar. The precious metal, which had touched an intraday all-time high above $5,100 in late January, is now testing what analysts consider a critical support level after enduring its worst monthly performance since 2008 in March.

The primary driver of the selloff has been a dramatic reassessment of monetary policy expectations. As energy price inflation surged following supply chain disruptions, inflation expectations climbed sharply, forcing the Fed to abandon its rate-cut projections. As of April 1, traders had priced in a 54 percent probability of a rate increase by year-end, pushing the U.S. dollar index up roughly 2 percent and weighing on the non-yielding metal. While CME FedWatch data shows markets pricing in approximately a 95 percent chance of rates being held at the April 29-30 FOMC meeting, the longer-term outlook has shifted decisively toward tighter policy.

The shift triggered a historic exodus from gold-backed exchange-traded funds. SPDR Gold Shares recorded a single-day outflow of $2.91 billion on March 4, the largest withdrawal in the fund's history, as institutional investors liquidated positions to cover margin calls following a global equity selloff. BlackRock's iShares Gold Trust lost $1.6 billion in a single week. In total, gold ETFs saw outflows of approximately $11 to $12 billion in March, the steepest monthly decline in more than a decade.

Despite the correction, major Wall Street banks are holding their bullish year-end forecasts. Goldman Sachs reiterated its $5,400 per ounce target on March 31, with senior commodities analyst Lina Thomas citing anticipated Fed rate cuts later in the year, persistent central bank buying, and the removal of short-term speculative positions. The bank estimates central banks will purchase an average of 60 tonnes of gold per month in 2026. JPMorgan maintained its year-end forecast of $6,300 per ounce, projecting sufficient demand from central banks and investors to drive prices well above current levels, according to Reuters. UBS set a 2026 target of $6,200, citing stronger-than-expected demand and ongoing de-dollarization trends.

The divergence between near-term price action and long-term forecasts highlights a market caught between competing forces. While rising yields and dollar strength have penalized the non-yielding metal in recent weeks, structural demand from central banks, which have collectively purchased more than 700 tonnes annually since 2022, continues to provide a floor. Whether the $4,600 level holds may determine whether this correction is viewed as a buying opportunity or the start of a deeper adjustment.