March 27, 2026: What is Happening to Gold?
Gold had an incredible rally in 2025. It nearly doubled in 2025 and peaked in February at nearly $5,300 per ounce.
Since its peak, the shiny yellow metal has had a steep decline to its current price of about $4,500 per ounce
The Rise
A few factors caused the run-up of gold prices in the past couple of years.
Devaluation of the US dollar is a notable factor. Some investors believed that the US would begin to devalue its currency for several reasons: high national debt, increasing exports, and even threats to the Fed’s independence were seen as justification for this trade.
Higher inflation. Inflation has remained above its target of 2% since COVID. Commodities like gold tend to do better during inflationary periods.
Fears of economic instability. There has been lingering concern that the US economy is on shaky ground, particularly when you consider that much of the growth of GDP in 2025 was driven by AI-investment. Investors believed that commodities could provide a hedge against a potential bubble or crash.
The Fall
Since the outbreak of war with Iran, gold has shed some of its appeal as a safe-haven. Here is what is contributing to its recent volatility.
The US dollar has gotten stronger since the war. With the recent surge of oil prices and fears about a prolonged war, the US dollar has gained strength as a safe-haven asset. Whether this rebound is short-lived remains to be seen.
Higher interest rates. The Federal Reserve is in no hurry to lower interest rates in 2026 with inflation remaining above target and unemployment creeping toward concerning levels. Gold doesn’t pay dividends or interest which makes it a less-attractive asset when interest rates are higher.
Everything else? The rest of the recent volatility is up for debate. Some speculate that countries may be selling gold to fund defense efforts for the ongoing war. Others observers wonder if investors are selling to lock-in profits after the historic run-up in gold prices.
Is gold a safe-haven asset or a hedge against economic uncertainty and inflation? This belief gets parroted over and again, but is it true? Like any strategy, “it works until it doesn’t.”
Gold for short-term funds or emergency funds is typically unwise. Gold doesn’t pay interest or dividends and can be volatile, as we’ve seen in recent times. For a long-term hold gold can provide diversification beyond a traditional stock and bond portfolio. But, don’t be fooled - recent history has shown us that gold can be volatile and carries its own set of risks.