From record highs to heavy losses: What drove gold prices down?

According to “Stabil.az”, by the end of March, the value of the precious metal fell by more than 11% to $4,672.24 per ounce.

Let’s examine how long this decline in gold may last, what levels are expected in the coming quarters, and the key factors driving the downturn.

First of all, it should be noted that in March, gold prices dropped below $4,100 for the first time in the past four months. According to the portal “Investing.com”, on March 23 the price of gold fell to $4,098.87 per ounce, marking its lowest level since November 24, 2025. As a result, prices declined by approximately 27% from the historical peak recorded on January 30, when gold reached $5,595 per ounce.

Although prices partially recovered toward the end of the month and stabilized at $4,672.24, the overall monthly loss stood at 11.5%.

A faster monthly decline was recorded only in October 2008 (16.9%), during the acute phase of the global financial crisis following the collapse of Lehman Brothers. At that time, investors were forced to sell even safe-haven assets like gold in order to raise liquidity.

One of the main reasons behind the current decline is the increased demand for liquidity among investors amid global market instability. At the end of February, the United States and Israel launched a large-scale military operation against Iran. As a result, the Strait of Hormuz—through which around 20% of global oil exports pass—was effectively disrupted, and energy infrastructure across the region was damaged.

This situation led to a sharp rise in oil and gas prices. Brent crude oil climbed to $114.33 per barrel during the month, its highest level since 2022, before closing the month at $107.25. Natural gas prices also surged significantly, with the Dutch TTF hub rising by 54% to $610 per 1,000 cubic meters.

Rising energy costs placed additional pressure on the global economy and triggered a sell-off across global stock markets. European indices declined by 6–11%, while Asian markets dropped by 11–19%. Notably, South Korea’s KOSPI index fell by 19%, and Japan’s Nikkei index dropped by 13.3%.

Another key factor behind the decline in gold prices is the rise in U.S. inflation expectations and the decreasing likelihood of interest rate cuts. Market expectations regarding the U.S. Federal Reserve have shifted, with investors now anticipating that interest rates will remain in the 3.5–3.75% range.

At the same time, a stronger U.S. dollar (+3%) and rising Treasury bond yields have reduced the attractiveness of gold as an investment. According to Bloomberg, more than 94 tons of gold were withdrawn from ETFs in March alone. Bank of America also reported that investors pulled $13.5 billion out of gold-related funds.

The sell-off trend also affected other precious metals. Platinum and palladium dropped by 17%, while silver lost 22.3%. The decline in these metals was even sharper due to their stronger dependence on industrial demand. For example, non-investment demand in the platinum group metals accounts for 85–98%.

Looking ahead, the main driver for the market in April will remain the situation in the Middle East. If energy prices remain elevated, inflation risks and higher interest rates will continue to exert downward pressure on gold.

According to experts, in the base scenario, gold prices are expected to trade in the range of $4,400–$4,700, while in a pessimistic scenario, prices could fall below $4,100.

At the same time, analysts remain optimistic in the medium term. They believe that gold prices could once again rise to $5,000 and beyond.

Major banks, including Goldman Sachs and J.P. Morgan, attribute the recent decline mainly to technical factors and maintain that the long-term upward trend in gold remains intact.