Spot Gold Price Breaks Below $4,500, Creating Largest Weekly Decline in 43 Years

Spot gold prices fell below $4,500, marking the largest weekly decline in 43 years.

Data shows that on March 20, spot gold (London Gold Fix) briefly rebounded before falling sharply within the day, with a V-shaped intraday movement, ultimately dropping 3.42% to $4,491.67 per ounce. This week, it plummeted 10.24%, the largest weekly decline since March 4, 1983. Spot silver (London Silver Fix) fell 6.8% to $67.897 per ounce, with a weekly decline of 12.687%.

On March 20, international precious metals futures also mostly declined. COMEX gold futures fell 2.47% to $4,492.00 per ounce, with an 11.26% decline for the week; COMEX silver futures dropped 4.78% to $67.81 per ounce, down 16.64% for the week.

As gold prices retreated, domestic gold jewelry brands also saw significant price drops. Chow Tai Fook’s official website showed that on March 20, pure gold jewelry was priced at 1,447 yuan per gram, down 56 yuan per gram from the previous day, with a total decline of 104 yuan per gram over the past two days.

Market opinions suggest that diverging global central bank monetary policy expectations, combined with increased US dollar hedging demand due to Middle East geopolitical tensions, have led institutions to turn bullish on the dollar, suppressing precious metal investments. Additionally, cautious market sentiment has contributed to the weakening of precious metal prices.

According to Xinhua News Agency citing US media reports on the 20th, the US military is dispatching three more ships and about 2,500 Marines to the Middle East. However, after the US stock market closed, Xinhua reported that President Trump posted on social media on the 20th, saying, “We are very close to achieving our goal,” indicating that the US is considering gradually de-escalating military actions against Iran.

Analysts point out that the gold correction reflects a combination of profit-taking and position unwinding, driven by concerns over the easing pace of monetary policy. When gold prices exceeded $5,200, heavy buying attracted more investors, making a correction more likely. As prices began to fall, many investors triggered stop-loss orders—automatic sell orders at certain levels—accelerating the sell-off.

A senior analyst at Swiss UBS said that rising oil prices would boost demand for the dollar. Currently, driven by Middle East tensions and with oil prices as a key variable, global investors prefer to go long on the dollar or hedge risks with the dollar rather than switch to gold.

Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, stated that while war provides some safe-haven support, it is only a secondary factor. The Federal Reserve’s outlook to keep interest rates unchanged until 2027 negatively impacts gold.

However, the CIO office of UBS Wealth Management, in its institutional outlook released on March 20, noted that geopolitical uncertainties, continuous reserve increases by multiple central banks, the US’s low real interest rate environment after inflation adjustment, and investor demand for safe-haven assets will continue to support gold prices. It is expected that gold could reach new highs this year. Looking ahead to 2026, the overall outlook for commodities remains optimistic. Structural trends such as supply-demand imbalances, energy transition, and global AI infrastructure development will drive strong returns in commodities. Investors are advised to allocate a small percentage of their diversified portfolios to commodities. Specifically, moderate overweighting in energy is suggested, as shipping disruptions could temporarily push prices higher; similarly, overweighting agricultural products is recommended due to high fossil fuel prices increasing biofuel demand, and rising fertilizer costs could also push prices upward. Gold and precious metals allocations should also be above benchmark levels.

Despite recent significant corrections, spot gold prices have still risen 4.02% this year; spot silver prices have shifted from gains to declines, with a year-to-date drop of 5.14%.

(Article source: The Paper)