Gold prices have successively broken through 4500, 4400, 4300, 4200, and 4100 dollars. Why has the safe-haven function "failed"?

Why does the rise in oil prices this time contrast with the movement of gold prices?

Within a day, spot gold prices repeatedly fell below $4,500, $4,400, $4,300, $4,200, and $4,100.

After last week’s international gold prices declined nearly 10% and silver prices dropped over 14%, on March 23, international gold and silver prices plunged again. Specifically, the spot gold (London Gold) price during Monday’s trading broke through the $4,500, $4,400, $4,300, $4,200, and $4,100 per ounce levels.

Wind data shows that as of press time, spot gold fell 5.93% to $4,225.21 per ounce, briefly dropping over 8% to $4,098.25 per ounce during the session; spot silver (London Silver) declined 6.42% to $63.54 per ounce, with a session low over 10% decline.

In futures markets, as of the time of reporting, COMEX gold was at $4,159.2 per ounce, down over 9%, a decline of 9.09%. COMEX silver was at $62.74 per ounce, down 9.95%.

In the domestic market, as of March 23 close, the main Shanghai Gold futures contract 2604 broke through key technical levels of 1,050 yuan/gram and 1,000 yuan/gram, indicating a downward break. The closing price was 940 yuan/gram, down 8.62%.

Shanghai Gold and Shanghai Silver also closed lower. Shanghai Gold closed at 938.58 yuan/gram, down 9.62%; Shanghai Silver at 15,541 yuan/kilogram, down 13%.

Notably, although gold performed well earlier this year, after multiple recent corrections, both spot and futures gold and silver gains since the beginning of the year have been erased, with some decline.

Looking back historically, during previous oil crises that caused oil prices to rise, gold prices often trended upward. Why does gold and silver behave so differently this time? Why has gold’s safe-haven attribute “failed”? What will be the future trend of gold prices?

Facing multiple pressures such as profit-taking and rising real interest rates

Market opinions suggest that the weakness in precious metals prices is mainly due to the large gains earlier, rising real interest rates, and the diminished safe-haven appeal.

Specifically, regarding profit-taking, Huafu Securities states that gold performed outstandingly among various assets in 2025 and attracted market attention. Its correlation with risk assets increased, leading to amplified volatility. Signs of overseas geopolitical conflicts have already appeared in negotiations and pressure, and combined with previous gains, funds may be selling to realize profits and exit.

Guotai Haitong Securities points out that gold’s recent rally was driven by speculative funds, showing characteristics similar to risk assets. As geopolitical tensions escalate and risk appetite declines, liquidity outflows can easily impact prices.

“The main pressure for this round of gold correction comes from continued outflows of funds from the Americas. Investment enthusiasm for gold in the Americas is highly correlated with rate cut expectations. As monetary policy expectations shift and concerns about rate hikes increase, downward pressure during the American trading session becomes more evident,” Guotai Haitong Securities further explains.

Regarding real interest rates, Dongwu Securities analysis states that as overseas disturbances intensify, major central banks signal hawkish policies, tightening monetary conditions globally. This causes long-term government bond yields to rise sharply, putting pressure on gold and silver prices.

“Among them, the more hawkish Bank of England’s tightening expectations strengthen the pound and euro, while the US dollar index underperforms, leading to a temporary synchronized decline of the dollar index and gold prices. The reason behind this is that, as a globally priced asset, gold is not only influenced by US real interest rate expectations but also by global real interest rate expectations,” Dongwu Securities notes.

Guotai Haitong Securities also points out that under market expectations of monetary tightening, real interest rates have risen significantly. As a non-yielding asset, gold is also suppressed by rising real interest rates.

“Regarding safe-haven demand, the safe-haven rally for gold already started in late February when overseas geopolitical tensions escalated. Once actual conflicts occur, profit-taking and selling to realize gains weaken gold’s safe-haven attributes,” Guotai Haitong Securities further states.

Historically, during previous overseas geopolitical conflicts that led to oil crises and sharp oil price increases, gold prices generally trended upward. However, in this current oil rally, gold has behaved quite differently.

Shenwan Hongyuan Securities explains that before 2000, the US was an oil importer, so rising oil prices were negative for the US current account, leading to a falling dollar index and rising gold prices. After 2000, the US became an oil exporter, so rising oil prices benefited the US current account, causing the dollar to strengthen and gold to face downward pressure.

“The key point is that, compared to oil crises, rising oil prices tend to temporarily boost the dollar index, which marginally harms gold prices,” Shenwan Hongyuan Securities states.

The foundation of the gold bull market remains intact

Despite the current headwinds from profit-taking, rising real interest rates, and oil prices, institutions remain cautiously optimistic about gold’s medium- to long-term prospects.

For example, Guotai Haitong Securities explicitly states that the foundation of the gold bull market still exists. If overseas geopolitical conflicts escalate further in the short term, energy prices may spike again, amplifying concerns about inflation and tightening monetary policies by major central banks, which could temporarily pressure gold.

“However, if oil prices remain high for an extended period, it could significantly boost inflation expectations. In such a scenario, the Federal Reserve might be hesitant to raise rates quickly due to economic slowdown risks, leading to a decline in real interest rates amid rising inflation, which would be positive for gold,” Guotai Haitong Securities notes.

Regarding trading strategies, Guotai Haitong Securities believes that if oil prices stay high long-term, market focus may shift from monetary tightening to stagflation (low growth and high inflation), providing room for gold to rise. “Therefore, in the long run, the logic for a sustained gold bull market remains solid, and investors can consider gold during periods of volatility and decline.”

Shenwan Hongyuan Securities emphasizes that a short-term oversold rebound in gold does not necessarily indicate a trend reversal. The recent sharp decline was mainly driven by overseas geopolitical tensions and hawkish Fed signals, which caused liquidity stress in a liquidity-crisis environment, leading to a “misprice” of gold, which is highly liquid. If geopolitical tensions ease temporarily and oil prices retreat from highs, liquidity conditions improve, and gold could still have upside potential.

“Second, the US economy’s intrinsic growth momentum is weaker than during the Russia-Ukraine conflict in 2022. The Fed’s actual rate hikes this year are likely to be limited, and the dollar may rebound to a range-bound state after a short-term rally, easing pressure on gold,” Shenwan Hongyuan Securities further explains. “Additionally, if oil prices continue to rise sharply in the mid-term, eventually triggering a global recession, and rate hike expectations shift toward systemic rate cuts, gold could find support.”

Huafu Securities also states that after liquidity shocks, the long-term support for gold remains. On one hand, central bank gold purchases provide solid backing. On the other hand, if overseas geopolitical conflicts persist, they could deplete dollar confidence and promote de-dollarization.

However, Shenwan Hongyuan Securities also warns that although technical signals suggest a short-term oversold rebound, it is uncertain whether this will form the bottom of the current correction.