Gold experienced one of its steepest declines in over 40 years, falling 17% in five trading days to under $4,200 an ounce, wiping out its 2026 gains and reaching the lowest level since late 2025.

UBS identifies three main drivers: rising energy costs stoked inflation fears and repriced Fed rate expectations, higher nominal bond yields and a stronger dollar weighed on gold, and physical demand dipped as Middle East trade channels were disrupted and ETFs shed 62 metric tons in March.

UBS compares the current drawdown to past episodes like the 1980 Volcker tightening and the 2013 taper tantrum, noting today’s 10–15% correction is more contained without a sustained real rate shock or clear Fed pivot to hikes.

UBS forecasts a return to tailwinds as 10-year Treasury yields fall from 4.42% to 3.75% and the euro rises to 1.20 by year-end, arguing the metal’s safe-haven appeal should reassert itself in the crisis’s next phase.