Gold cheapest since November 2025: Five reasons the yellow metal is losing its shine

Gold has lost some of its glitter. The precious metal fell below the psychologically important $4,000-an-ounce mark this week for the first time since November 2025, extending a sharp sell-off that has wiped out nearly 29 per cent of its value from the record high of $5,594.82 reached in January.

Spot gold was trading at $3,971.08 per ounce on Thursday, while US gold futures slipped to $3,987. The decline comes after months of extraordinary gains driven by geopolitical tensions, central bank buying and expectations of lower interest rates.

So why is gold suddenly under pressure? Here are the five key reasons behind the metal's biggest slump in seven months.

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1. The Federal Reserve has turned hawkish

The biggest factor weighing on gold is the growing expectation that the US Federal Reserve could raise interest rates later this year.

At the Fed's latest meeting, policymakers struck a tougher tone on inflation, with Chairman Kevin Warsh emphasising the central bank's commitment to restoring price stability. Markets are now pricing in roughly a 67-70 per cent probability of a rate hike as early as September, while some traders expect as many as three increases this year.

Higher interest rates tend to hurt gold because the metal does not generate any income. As yields on bonds and other fixed-income assets rise, investors have less incentive to hold non-yielding assets such as bullion.

2. A stronger dollar is making gold more expensive

The US dollar has surged to its highest level in more than a year, creating another headwind for precious metals.

Because gold is priced in dollars, a stronger greenback makes it more expensive for buyers using other currencies. That typically reduces international demand and puts downward pressure on prices.

The dollar's recent strength is closely linked to expectations of tighter monetary policy in the United States. As investors move money into dollar-denominated assets to capture higher yields, the currency has continued to gain ground.

Analysts say the combination of a hawkish Fed and a strong dollar has created a particularly challenging environment for gold.

3. Safe-haven demand is fading

Gold's rally earlier this year was fuelled in part by fears surrounding the conflict involving Iran and broader uncertainty across West Asia.

But recent progress in US-Iran negotiations and signs of de-escalation have reduced the so-called "war premium" embedded in gold prices. Developments surrounding shipping through the Strait of Hormuz and discussions over Iranian assets have eased concerns about a wider regional disruption.

When geopolitical risks decline, investors often rotate out of safe-haven assets such as gold and move back into equities and other growth-oriented investments.

The easing of tensions has therefore removed one of the strongest pillars supporting gold's record-breaking rally.

4. Rising real yields are hurting bullion

Another challenge for gold comes from rising real Treasury yields.

Real yields, which account for inflation, have moved higher as investors reassess the path of US monetary policy and inflation risks. Higher real yields increase the attractiveness of interest-bearing investments relative to gold.

Market strategists often describe this relationship as one of the strongest drivers of bullion prices. When investors can earn higher inflation-adjusted returns elsewhere, demand for gold tends to weaken.

The recent rise in yields has also triggered liquidation by investors who had accumulated large positions during the metal's historic rally.

5. Profit-taking and technical selling have accelerated the decline

After doubling in value over the past few years, gold entered 2026 with stretched valuations.

As prices started falling, many investors chose to lock in profits, adding momentum to the sell-off. The decline was amplified by technical factors, including key moving-average breakdowns and automated trading signals.

Analysts also point to weaker exchange-traded fund inflows and softer physical demand as contributing factors. While central banks remain net buyers of gold overall, their purchases have not been enough to offset the pressure from institutional investors and traders reducing exposure.

Is this a buying opportunity?

Despite the recent correction, many market observers are not ready to abandon gold's long-term story.

Central bank purchases remain historically strong, geopolitical risks have not disappeared entirely, and inflation concerns continue to linger. Any signs of economic weakness or a shift back towards monetary easing could revive interest in bullion.

For now, however, short-term market dynamics are dominating.

With the Federal Reserve signalling a tougher stance, the dollar at multi-month highs and safe-haven demand fading, gold is facing the kind of macroeconomic headwinds that have historically triggered sharp pullbacks.

Whether this marks the end of the rally or merely a pause remains one of the biggest questions facing investors in the months ahead.