Gold Falls Over 8%, Hits Four-Month Low On Stronger Dollar And Rate Hike Bets

Gold prices declined sharply on Monday, falling more than 8% during the session to a four-month low, as investors exited positions amid a stronger U.S. dollar and rising expectations of interest rate increases, according to Reuters.

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Spot gold was down 4.9% at $4,266.47 per ounce as of 10:17 GMT, extending losses for a ninth consecutive session. Earlier in the day, prices fell to $4,097.99 per ounce, the lowest level since November 24.

Sharp Decline From Recent Peak

Gold has dropped about 25% from its record high of $5,594.82 reached on January 29. Thus, since the beginning of the ongoing conflict on February 28, the metal has declined by about 22%. 

U.S. gold futures for April delivery have also declined by 6.7% at $4,267.50, which follows the decline in spot prices.

Dollar Strength And Bond Yields Weigh On Gold

The decline in gold prices has coincided with a rise in the value of the dollar as well as benchmark 10-year Treasury yields, which have a negative impact on gold.

According to the FedWatch tool of the CME, there has been a change in the expectations of investors, as the tool indicates a higher chance of interest rate hikes by the Federal Reserve by the end of 2026.

Oil Prices And Market Movements

Crude oil prices have continued their higher levels above $110 per barrel, as seen on Monday, amid geopolitical tensions.

Despite gold’s traditional role as an inflation hedge, rising energy prices have strengthened expectations of tighter monetary policy, influencing investor positioning in bullion.

Other Precious Metals Decline

Other precious metals also recorded losses during the session. Spot silver fell 5.5% to $64.01 per ounce, while platinum declined 7.2% to $1,783.30 per ounce. Palladium dropped 2.1% to $1,374.73.

Both silver and platinum touched their lowest levels since mid-December during the session.

Continued Weakness In Bullion Prices

The drop in gold prices can be attributed to several factors. A stronger U.S. dollar is one of them. Higher bond yields, and shifting monetary policy expectations.

Price movements show that gold continues to sell off as prices fall to their lowest since November. Gold has extended its losing streak.