Gold drops sharply as macro headwinds eclipse safe-haven demand

Bengaluru: Gold prices in the Indian retail market have plunged 21.6% over the past three weeks, dropping from Rs 1,58,650 per 10 grams on March 1, to Rs 1,24,350 per 10 grams on March 23, even as global markets witnessed one of the sharpest corrections in decades.

The yellow metal, which had been on a sustained upward trajectory through 2025 and into early 2026, fell over 5% on Monday to hit a four-month low, after recording its steepest weekly loss in over 40 years.

Globally, gold slipped below $4,300, down about 5.5% (about $250), while MCX prices corrected by around Rs 11,000 to Rs 1,33,700 (about 7.5%). Analysts say the fall, though unusual for a traditional safe-haven asset, reflects a broader macroeconomic shift.

“From a price perspective, the correction has been substantial,” said Saumil Gandhi, Senior Analyst — Commodities at HDFC Securities. “MCX gold has fallen over 20% from its March 2 high, while silver is down nearly 33%. Globally, gold has corrected about 24% and silver 35%, even as US Treasury yields have risen around 12%, signalling a shift toward yield-bearing assets,” he told DH.

Hareesh V, Head of Commodity Research, Geojit Investments Limited, maintained that gold has not yet entered a bear phase. “Gold has not officially entered a bear market. It has rallied more than 170% over the past two years, indicating sustained long-term strength despite recent volatility,” he said, adding that a fall below $3,200 would signal a structural bearish shift.

Silver futures were at Rs 2,03,615, down 10.21% on Monday. Hareesh noted that despite escalating West Asia tensions, bullion has weakened due to macro pressures. “A strong US dollar and rising Treasury yields have increased holding costs and made dollar-priced metals expensive. Profit-taking and liquidity needs have also triggered selling after the earlier rally,” he said.

Rising oil prices have further fuelled inflation concerns, delaying expectations of rate cuts and weighing on non-yielding assets. The World Gold Council said higher real yields, expectations of policy tightening in 2026, and deleveraging have hurt sentiment.

Deveya Gaglani, Senior Research Analyst — Commodities, Axis Securities, attributed the decline to multiple factors. “Markets are now pricing in the economic impact of a prolonged military presence. Inflation concerns have pushed expectations of a 50% chance of a US Federal Reserve rate hike by October, reversing earlier easing bets,” he said. Gold, he added, is under pressure from rising yields, a stronger dollar and profit-booking.

On the technical front, Gaglani flagged weakening momentum. “Gold has closed below its 60-week EMA (Exponential Moving Average) for the first time since the 2025 rally, indicating a breakdown in the structural uptrend,” he said, cautioning that failure to reclaim $4,300 could drag prices toward $4,000.

He advised against aggressive buying, recommending staggered accumulation near $4,000-4,100 for long-term portfolios.

Jateen Trivedi, VP and Research Analyst — Commodity and Currency, LKP Securities, said downside levels of $4,000 and $3,600 remain open, though a de-escalation in tensions could trigger a rebound toward $5,000.

Renisha Chainani, Head of Research, Augmont, said gold’s safe-haven status remains intact, though behaviour has shifted. “In periods of acute stress, markets prioritise liquidity over safety, leading investors to sell gold to raise cash,” she said.

Gandhi concluded that while the correction may persist in the short term, prolonged geopolitical stress could revive demand, supporting a recovery over the medium to long term.