Gold market continues to fall: a double blow from the shadow of war and tightening monetary policy.
2026-03-20 01:37:06
Gold and silver prices fell sharply in midday trading on Thursday (March 19), hitting their lowest levels in six weeks. Spot gold fell 5.5% to $4,552.38 per ounce, its lowest level since early February; U.S. gold futures for April delivery fell 7% to $4,554.70. Spot silver fell 10.7% to $67.26 per ounce, platinum fell 6.8% to $1,886.13 per ounce, and palladium also saw a significant pullback.
TD Securities commodity strategist Daniel Galli noted, "Gold has become a common holding for institutional investors, with its price supported by depreciation over the past year, but this trading basis is weakening recently. In the short term, gold still faces downside risks."
Gold, as a tool to hedge against inflation and geopolitical risks, has lost its appeal in a high-interest-rate environment, which has become a significant factor in the recent price decline.
Middle East conflict exacerbates energy price volatility
The ongoing tensions in the Middle East are impacting energy markets, further affecting precious metals. Following Israel's attack on Iran's South Pars gas field, Iran retaliated against energy facilities across the Middle East, causing Brent crude to briefly surpass $110 per barrel. This also led to a pullback in copper prices from their earlier gains this year, with a cumulative decline of over 9% this month.
Market analysts believe that the war has driven up energy prices and increased global economic uncertainty. This risk sentiment should have boosted demand for gold as a safe haven, but traders have taken profits.
SP Angel analysts point out that given the strong rally in gold in 2025, it's not surprising that investors are locking in profits and turning to new trades like hydrocarbons amid increased market volatility.
Central banks around the world maintain hawkish stance
On Wednesday, Federal Reserve officials decided to keep interest rates unchanged, in line with market expectations. The Federal Open Market Committee indicated that a rate cut is possible this year due to uncertainty surrounding the Middle East wars. Fed Chairman Jerome Powell emphasized that progress in reducing inflation must be made before a rate cut can begin, while raising the 2026 inflation forecast to 2.7%.
While central banks have adopted a hawkish stance, they remain cautious due to the shadow of war. High interest rates have dampened demand for gold, while a stronger dollar has also increased downward pressure on precious metal prices.
Technical Analysis: Key Support Levels Broken
(Spot gold daily chart source: FX678)
From a technical perspective, gold has fallen by approximately 16.5% since reaching a high of $5,416 at the end of February, marking its largest drop in nearly six months. Spot gold prices have broken below the key 100-day moving average ($4,577.21), a level that has historically served as support multiple times, including during the pullbacks in July-August 2025 and November 2023-January 2024.
During the day's trading, gold touched a low of $4,502.83 before rebounding slightly. Analysts pointed out that a break of this support level could indicate a change in the short-term trend, but there is also a risk of a false breakout, and traders need to pay attention to subsequent price reactions.
Summarize
In summary, gold prices face three major pressures: first, geopolitical risks have pushed up energy prices, but this has not fully supported safe-haven buying; second, the high-interest-rate environment under the hawkish stance of central banks worldwide has dampened the attractiveness of precious metals; and third, key technical support levels have been broken, resulting in significant downward pressure in the short term. In the current market environment, investors should pay close attention to the direction of global monetary policy and developments in the Middle East, while cautiously managing their trading pace.
At 01:35 Beijing time, spot gold was trading at $4,607.63 per ounce, down 4.38%.
TD Securities commodity strategist Daniel Galli noted, "Gold has become a common holding for institutional investors, with its price supported by depreciation over the past year, but this trading basis is weakening recently. In the short term, gold still faces downside risks."
Gold, as a tool to hedge against inflation and geopolitical risks, has lost its appeal in a high-interest-rate environment, which has become a significant factor in the recent price decline.
Middle East conflict exacerbates energy price volatility
The ongoing tensions in the Middle East are impacting energy markets, further affecting precious metals. Following Israel's attack on Iran's South Pars gas field, Iran retaliated against energy facilities across the Middle East, causing Brent crude to briefly surpass $110 per barrel. This also led to a pullback in copper prices from their earlier gains this year, with a cumulative decline of over 9% this month.
Market analysts believe that the war has driven up energy prices and increased global economic uncertainty. This risk sentiment should have boosted demand for gold as a safe haven, but traders have taken profits.
SP Angel analysts point out that given the strong rally in gold in 2025, it's not surprising that investors are locking in profits and turning to new trades like hydrocarbons amid increased market volatility.
Central banks around the world maintain hawkish stance
On Wednesday, Federal Reserve officials decided to keep interest rates unchanged, in line with market expectations. The Federal Open Market Committee indicated that a rate cut is possible this year due to uncertainty surrounding the Middle East wars. Fed Chairman Jerome Powell emphasized that progress in reducing inflation must be made before a rate cut can begin, while raising the 2026 inflation forecast to 2.7%.
While central banks have adopted a hawkish stance, they remain cautious due to the shadow of war. High interest rates have dampened demand for gold, while a stronger dollar has also increased downward pressure on precious metal prices.
Technical Analysis: Key Support Levels Broken
(Spot gold daily chart source: FX678)
From a technical perspective, gold has fallen by approximately 16.5% since reaching a high of $5,416 at the end of February, marking its largest drop in nearly six months. Spot gold prices have broken below the key 100-day moving average ($4,577.21), a level that has historically served as support multiple times, including during the pullbacks in July-August 2025 and November 2023-January 2024.
During the day's trading, gold touched a low of $4,502.83 before rebounding slightly. Analysts pointed out that a break of this support level could indicate a change in the short-term trend, but there is also a risk of a false breakout, and traders need to pay attention to subsequent price reactions.
Summarize
In summary, gold prices face three major pressures: first, geopolitical risks have pushed up energy prices, but this has not fully supported safe-haven buying; second, the high-interest-rate environment under the hawkish stance of central banks worldwide has dampened the attractiveness of precious metals; and third, key technical support levels have been broken, resulting in significant downward pressure in the short term. In the current market environment, investors should pay close attention to the direction of global monetary policy and developments in the Middle East, while cautiously managing their trading pace.
At 01:35 Beijing time, spot gold was trading at $4,607.63 per ounce, down 4.38%.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
