Beware! Gold Enters Extreme Zone, Price Plummets 1.3% in Hours

Jakarta, CNBC Indonesia - The gold market is experiencing extreme volatility due to historic large-scale selling actions, geopolitical tensions, and changes in macroeconomic conditions.

According to Refinitiv, the gold price today, Monday (6/4/2026) at 06:30 WIB, stands at US$4,614.43 per troy ounce. The price plummeted 1.31% in just around one hour after trading opened.

This weakening extends gold’s suffering. In the last trading session last week, Thursday (2/4/2026), gold prices fell 1.72%. Gold trading closed on Friday due to Good Friday celebrations.

Gold prices have dropped more than 11% in March and 26% from their peak on 29 January 2026, wiping out more than US$2 trillion in market value, as gold has shifted from a safe-haven asset to a source of liquidity.

The strength of the US dollar and rising bond yields are also pressuring gold prices, while upcoming economic data could influence market expectations going forward.

Despite high volatility, demand for gold from central banks remains strong, providing long-term support for prices amid global uncertainties.

Gold Faces Extreme Times

The gold market has entered a period of extreme volatility due to large sell-offs, changes in macro conditions, and geopolitical uncertainties that have altered the narrative of gold as a safe asset.

Gold prices have already fallen more than 26% from their peak.

What makes this movement striking and surprising is that the weakening is occurring amid rising geopolitical tensions with Iran, a situation that usually supports gold prices. However, gold is instead facing massive selling pressure as investors unwind overcrowded long positions and redirect funds to other assets.

The speed and magnitude of the decline indicate a sharp change in market dynamics. Rather than serving as a hedge, gold has become a source of liquidity as investors adjust their portfolios.

Geopolitical Tensions Add Complexity

Over the weekend, US President Donald Trump escalated rhetoric regarding the Middle East conflict, extending the deadline for Iran to reopen the Strait of Hormuz while threatening attacks on critical infrastructure.

This has placed the market in a complex situation. On one hand, the deadline extension signals there is still room for diplomacy. On the other hand, increasingly aggressive language heightens the risk of conflict escalation, especially if energy infrastructure becomes a target.

The on-ground situation remains dynamic, with ongoing military activities and indications that Iran is preparing for a prolonged conflict. The market is now monitoring the balance between potential de-escalation and the risk of major disruptions to global oil supplies.

The main drivers of gold’s decline are the strengthening US dollar and rising bond yields. When oil prices surge, global demand for the dollar increases, thus pressuring gold.

At the same time, Jerome Powell has signalled a more hawkish stance from the Federal Reserve, emphasising that inflation risks remain high.

This has shifted market expectations, with the likelihood of interest rate cuts in the near term diminishing. Higher interest rates reduce the appeal of gold (which yields no return), prompting investors to shift to bonds and cash.

What Are the Major Risks This Week?

Market attention is now focused on several key US economic data releases that will determine the short-term direction.

The Federal Open Market Committee (FOMC) minutes indicate a cautious stance, with interest rates held steady and projections for growth and inflation slightly increased.

Upcoming inflation data is crucial because US personal consumption expenditures (PCE) inflation is expected to continue showing inflationary pressure, and March inflation is forecast to rise again, driven by energy price increases.

All of this reinforces expectations that interest rate policy will remain “higher for longer”, limiting gold price gains in the short term.

Rising oil prices add complexity to the macro environment. Higher energy costs increase inflationary pressures and production costs across various sectors.

If energy disruptions persist, the impact could be more permanent on inflation and economic growth. This heightens market volatility and affects investors’ asset allocation decisions.

Latest Projections

Goldman Sachs has reaffirmed its gold price projection of US$5,400 per ounce by year-end, despite the largest monthly decline in March since 2013.

Analysts cite three main pillars supporting this projection: purchases of gold by central banks in developing countries at 60 tonnes per month, strong ETF inflows, and private investor demand linked to concerns over debt and monetary policy.

While acknowledging short-term downside risks from the Iran war and disruptions in the Strait of Hormuz, Goldman believes structural factors will sustain long-term buyer interest.

According to UBS, current macroeconomic conditions are becoming less supportive in the short term.

The strengthening US dollar, rising oil prices, and changing interest rate expectations have driven up real yields, reducing the appeal of non-yielding assets like gold.

Escalation of tensions in the Middle East is further reinforcing this dynamic by delaying monetary easing expectations and tightening financial conditions.

Reflecting this pressure, UBS has lowered its short-term projection by revising its end-June gold price forecast to US$5,200 per ounce, from a previously more optimistic level.

This downward revision reflects weakening investor demand and the impact of high volatility following recent market corrections.