Gold Slumps 6% as Interest Rates Rise

Words by Jakub Rochlitz, Market Analyst at eToro
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Abu Dhabi, UAE – March 23, 2026: Gold prices have come under significant pressure, falling 6% on Monday after a 10% decline last week, as shifting macroeconomic conditions weigh heavily on the precious metal. March is now shaping up to be one of the weakest months on record for gold, with prices down nearly 21% since the beginning of the month.
Traditionally viewed as a safe-haven asset during periods of geopolitical uncertainty, gold is currently facing headwinds from rising inflation expectations and a rapidly evolving interest rate outlook. The escalation of conflict in the Middle East has driven oil prices higher, fueling inflation concerns and prompting markets to reassess monetary policy expectations. Investors are increasingly abandoning expectations of interest rate cuts in the United States, while preparing for the possibility of faster rate hikes in the UK and Europe. This shift has significantly altered the investment landscape, reducing the appeal of non-yielding assets such as gold.
At the same time, yields on US government bonds have surged, with the 10-year Treasury yield rising by nearly 0.5 percentage points since the start of the month to 4.421%—its highest level since the summer of 2025. Higher yields are strengthening currencies and exerting downward pressure on equities, further diminishing the relative attractiveness of gold.
In addition, the market is experiencing a wave of profit-taking following gold’s strong performance last year, when prices rose by approximately 66%. This has contributed to a broader liquidation phase, marked by ETF outflows, forced selling, and investors closing positions to offset losses in other asset classes.
Despite these short-term challenges, structural support for gold remains intact, particularly from ongoing central bank purchases, which have underpinned the longer-term bullish trend.

​Jakub Rochlitz, Market Analyst at eToro, commented: “Gold is currently caught between
two opposing forces. While geopolitical tensions would support demand for safe-haven
assets, the inflationary impact of rising energy prices is driving expectations of higher
interest rates, which is weighing heavily on gold.
What we are seeing resembles a classic liquidation phase, with investors taking profits after
last year’s strong rally and repositioning in response to changing macro conditions. In the
near term, volatility is likely to remain elevated as markets adjust to these dynamics.
Looking further ahead, the long-term outlook for gold has not been entirely undermined. Its
performance will depend on how the geopolitical situation evolves, how inflation trends
develop, and how central banks respond.”
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