Gold bars weighing 1000 grams each are displayed at the Austrian Gold and Silver Refinery (Oegussa) in Vienna, Austria, on Feb. 3, 2026.
Georg Hochmuth | AFP | Getty Images
Gold extended its slide on Tuesday, deepening its bear market phase, as investors unwind positions, with a stronger U.S. dollar and elevated Treasury yields reducing the yellow metal's allure.
Spot gold prices declined 2% before paring losses to 1% to $4,335.97 per ounce. Gold futures for April delivery also cut losses and were last down over 1% at $4,358.80 per ounce. Spot silver was down more than 3% to $66.93 per ounce, while futures were 2.61% lower at $67.54.
The dollar index, which measures the strength of the greenback against a basket of currencies, was up 0.5% on Tuesday. A stronger dollar reduces greenback-priced bullion's appeal by making it more expensive for holders of other currencies.
U.S. President Donald Trump on Monday said he had ordered a 5-day pause on planned strikes against Iran's energy infrastructure following what he described as "productive" discussions with Iranian officials. He later told CNBC's Joe Kernen that "we are very intent on making a deal with Iran," signaling that the war could end soon.
Gold prices since the start of the year
However, Iranian state media pushed back on that account, citing a senior security official who said no direct or indirect talks had taken place between Washington and Tehran.
Spot gold has now lost over 22% since hitting a record high of $5,594.82 per ounce at the end of January, with the precious metal losing almost 10% last week in its worst showing since September 2011.
Market watchers attributed the decline to a mix of macro and positioning-driven factors.
"Although gold initially gained due to safe haven demand at the start of the conflict, prices have recently pulled back," said Rajat Bhattacharya, senior investment specialist at Standard Chartered.
"We see this pattern repeated during periods of heightened market stress as investors raise cash to pay margin calls or simply book profits where they can," he told CNBC via email, adding that the dollar's recent strength has also weighed on gold demand.
The dollar index has strengthened around 3% since the start of the war.
Market participants have also been reassessing expectations for U.S. monetary policy, with persistent inflation reducing the likelihood of aggressive Federal Reserve rate cuts, keeping Treasury yields higher.
Higher yields dent the appeal of the non-interest bearing bullion. The yield on 10-year Treasuries was about 5 basis point higher at 4.384% on Tuesday.
Some analysts noted the sell-off was a natural correction after an extended rally fueled by geopolitical uncertainty and structural demand. Gold rose over 64% last year.
"Gold's recent rally to record highs was driven less by inflation than by a broader loss of confidence: fiscal deficits, geopolitical fragmentation, and central banks quietly diversifying away from dollar reserves," said Zavier Wong, market analyst at eToro.
"After a run like that, some position unwinding was inevitable. Gold has been one of the better-performing assets over the past year, and when markets get choppy, leveraged funds and institutional investors tend to reduce exposure."
English (US) · 