After climbing to around $5,600 per ounce in January, gold fell nearly 20–25% to about $4,100 in March, as war in the Middle East, soaring oil prices and inflation fears reshaped market expectations, News.Az reports, citing Business-Review.
Analysts at Freedom24, the European retail brokerage unit of Nasdaq-listed financial group Freedom Holding Corp., explain what triggered this unexpected sell-off and whether gold remains a compelling investment. Why did gold suffer its sharpest fall since 2008?
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Investors saw the Middle East conflict not as a normal geopolitical event, but as the start of a new inflation shock, increasing expectations that central banks would keep interest rates higher for longer. That was negative for gold. As US Treasury yields rose and the dollar strengthened, investors moved into more liquid safe-haven assets such as the dollar and short-term US bonds, while demand for gold weakened. The decline was made worse by an overheated market, with many speculative positions already in place after gold’s strong rally in 2025 and January 2026. When volatility jumped, investors sold gold to take profits and cover losses elsewhere. Additional pressure came from reports that some central banks may have sold gold to support their currencies, finance energy imports and cover budget needs.
„The March correction of gold highlighted an important point: gold is not a perfect hedge against an oil shock and an inflation spike. In the early weeks of an energy crisis, oil and the dollar may indeed look better than gold. But if high energy prices begin to undermine economic growth and force central banks to face a difficult choice between inflation and recession, gold once again becomes one of the main safe-haven assets. Therefore, the March slump looked more like a stress test and a mass reduction in positions than the end of the long-term bull case for gold”, stated Radu-Iulian Pădurean, Network Development Manager at Freedom24.Is gold no longer a safe-haven asset?
The March correction does not mean gold has lost its safe-haven role. It suggests that gold can come under pressure in the early stage of an inflation shock. But this pressure is often temporary. If high energy prices begin to slow economic growth and raise the risk of policy mistakes, gold tends to regain its appeal as a defensive asset.That was already visible in early April. Following the truce between the US and Iran, oil fell below $100, the dollar weakened, the market began discussing the likelihood of rate cuts once more, and gold quickly recovered to nearly $4800 per ounce. Even after the March correction, the People’s Bank of China continued to buy gold for the 17th consecutive month. This is an important signal: the largest official buyers do not view the March decline as the end of the long-term trend.
Is it worth investing in gold after the correction? After a 20–25% drop, gold looks much less overvalued than it did in January. It is still not cheap, and some geopolitical premium remains in the price, but the broader outlook stays supportive. Central banks continue to buy large amounts of gold, while risks linked to conflict, high energy prices, stagflation and de-dollarization have not disappeared. Many investors still see the March sell-off as a market reset rather than the end of the long-term uptrend.
That said, a gradual approach makes more sense than buying aggressively after such volatility. If tensions in the Middle East rise again, oil moves back above $100 and fears of economic slowdown grow, gold could retest the $5,200–$5,400 range. If de-escalation continues, oil falls further and real interest rates ease, gold may trade in a broader $4,500–$5,000 range, supported by a weaker dollar, ongoing central-bank demand and expectations of lower rates.
