Gate News Report, March 23 — Gold prices plummeted approximately 25% from a high near $5,600 per ounce, falling below $4,200 per ounce. Market capitalization evaporated over $10 trillion, about 7.6 times Bitcoin’s (BTC) total market value. Despite ongoing US-Iran tensions and rising inflation—factors typically favorable for precious metals—gold prices still experienced a sharp decline, sparking intense market debate over the reasons for the sell-off.
Senior gold advocate Peter Schiff called the sell-off unjustified, attributing it to traders misjudging the Federal Reserve’s hawkish stance. He pointed out that historically, declining real interest rates benefit gold, while high interest rates could push the economy into recession. He believes the Fed will eventually reverse course through rate cuts and quantitative easing (QE). Additionally, Treasury Secretary Scott Bessent confirmed that the government will finance war expenses through borrowing rather than tax increases. The expanding deficit and high 10-year US Treasury yields could trigger financial risks more severe than those in 2008.
Analyst Kyle Doops considers the sell-off unusual given the still-high geopolitical risks. He noted that factors like forced liquidations, crowded trades, or tightening policy expectations cannot fully explain the sharp decline in gold prices. Increased margin requirements for gold futures and the US dollar index approaching 100.50 have further pressured international buyers to sell. Silver prices also suffered, dropping nearly 50% from recent highs to around $61 per ounce, a three-month low.
Market observers suggest this plunge may be a position adjustment after an upward run rather than a fundamental change in gold’s safe-haven status. Over the next week, investors will closely monitor macroeconomic data, inflation trends, and Federal Reserve policy signals to determine whether gold will sustain a rebound or face further deep corrections.
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