JustMarkets Analysis Reveals Key Drivers Behind Gold Price Volatility
Gold prices have been on a volatile correction since hitting a record high of $5,595/oz in late January 2026. Despite traditional geopolitical support, gold continues to lose ground, a trend attributed to combined macroeconomic pressures.
The appeal of non-yielding gold diminishes when interest rates rise, which is exactly what happened after better-than-expected employment reports and hot CPI data forced the market to pivot its expectations regarding the Fed. As a result, real yields on US Treasury bonds climbed, making gold less attractive.
A stronger USD also adds pressure to gold prices. When the greenback strengthens, gold becomes relatively more expensive when purchased with other currencies, potentially leading to a decline in price-sensitive physical gold demand. In March, the market fell into a 'double headwind scenario,' which was one of the reasons gold experienced its sharpest monthly decline since 2013.
Central banks were a primary driver pushing gold prices higher between 2025 and 2026, with their purchasing volume nearly doubling compared to the historical average. However, this activity has become more erratic as some banks reduced their positions in Q1.