On March 23, influenced by a mix of macroeconomic expectations and geopolitical risks, the gold market underwent a significant correction. Moneta Markets noted that despite ongoing turmoil in the Middle East, gold failed to demonstrate its traditional safe-haven characteristics. Instead, it weakened substantially under the dual pressures of shifting interest rate expectations and a strengthening US dollar, indicating a change in market pricing logic. Market data reveals that gold has fallen for eight consecutive trading days, recording its worst weekly performance in over forty years. Moneta Markets stated that a correction of this magnitude reflects a clear shift towards caution in market sentiment, with capital flowing out of precious metals in a phased manner.

It is noteworthy that, according to traditional logic, geopolitical conflicts typically benefit gold, but this round of price action shows a significant divergence. Data indicates that the US dollar continued to strengthen during the conflict period, while bond yields rose, putting downward pressure on gold. Furthermore, after holding within a previous consolidation range for some time, gold broke downwards on Thursday; this technical movement further intensified selling pressure in the market. Moneta Markets believes this suggests that safe-haven capital is flowing more towards US dollar-denominated assets rather than gold.

The deeper reasons lie in changes in inflation and interest rate expectations. A sharp rise in energy prices, particularly crude oil approaching multi-year highs, has fueled concerns about imported inflation. Data shows that several major central banks have expressed caution regarding the inflation outlook, hinting that interest rate cuts are unlikely in the short term and even leaving open the possibility of further policy tightening. Against this backdrop, the appeal of gold as a non-yielding asset has diminished significantly.

Specifically, some central banks have already implemented or signaled a tighter policy path, such as individual banks raising rates, while other major central banks have held rates steady and released cautious signals. Markets have broadly scaled back expectations for future easing policies. This adjustment in expectations has directly weakened the short-to-medium-term support for gold. Concurrently, the opportunity cost of holding gold increases as interest rates rise, further dampening allocation demand.

However, historical experience shows that long-term bull markets in gold are often accompanied by multiple deep corrections. Data indicates that during both the 1970s and the early 2000s uptrends, there were periodic declines, but these did not alter the overall upward trend. Therefore, although the current environment is unfavorable for gold, it does not mean the long-term rationale has completely reversed.

In summary, Moneta Markets believes the current weakness in gold is primarily due to the combined impact of upwardly revised interest rate expectations and a stronger US dollar, rather than being driven by a single factor. In the short term, if the high-interest-rate environment persists, gold prices may continue to face pressure. However, from a medium-to-long-term perspective, its trajectory still requires comprehensive assessment incorporating the inflation path, potential policy shifts, and changes in global liquidity.