Gold plunges 3.40% as Dollar surge, rising rate bets crush safe-haven appeal

Gold price tumbles as surging U.S. dollar demand turns short-term market sentiment bearish.
Rising crude oil prices stoke inflation fears, altering Fed rate expectations and affecting gold’s outlook.
CME FedWatch shows rate cuts repriced, lowering support for further gold rally momentum.
Iran threatens to fire on ships crossing the Strait of Hormuz.
Market attention shifts to inflationary risks, analysts say.
Silver, platinum, and palladium plunge sharply.

Ali Merchant, CMT TwT Learning

Spot gold slid over 4% on Tuesday as some investors chose the dollar over gold amid the US-Israeli air war with Iran, and traders pared back rate-cut expectations amid inflation worries.

Spot gold fell 3.3% to $5,150.89 an ounce by 13:50 GMT, after earlier dipping to its weakest level since Feb. 20.

The U.S. dollar climbed 0.9% to a one-month high and Treasury yields surged, making dollar-priced gold costlier for foreign buyers and increasing the opportunity cost of holding the non-yielding metal, while the Nasdaq led U.S. futures lower with a 2.3% drop on Tuesday.

Global oil and gas shipping rates surged after an IRGC official declared the Strait of Hormuz closed and warned ships would be fired upon, stoking inflation fears.

Although gold is a long-term inflation hedge, higher inflation can lift real yields and strengthen the dollar, keeping borrowing costs high and curbing demand for the non‑yielding metal.

Current target rate – 3.50 - 3.75

CME FedWatch March no rate change probabilities have moved higher to 97.4% today from 90.6% on February 02, 2026.

Gold/US Dollar

Gold rallied as mentioned in our last report.
Prices are holding $5,118 to $5,075 base, which was the point of acceleration in the recent rally.
XAU may roll higher to $5,205 -$5,240 in a corrective fashion.
Gold will role lower once the upside correction is over.
Downside target is around $5,000.

Gold four-hourly chart

Gold/Silver ratio

The gold–silver ratio measures how many ounces of silver are needed to buy one ounce of gold (gold price ÷ silver price), a key gauge of relative value and potential moves.
Ratio is hovering between 65 to 56 range meaning within February range.
This ratio moving higher means both Gold and Silver would decline in the coming weeks.

Gold/Silver ratio monthly chart

Author

Ali Merchant, CMT

TwT Learning

Ali Merchant is a seasoned financial market professional with expertise in Technical Analysis, Treasury & Capital Markets, Trading, Sales, Research, Training, & Fund Management, He has been trading FX, FX options, US stock

EUR/USD remains offered below 1.1600, seems vulnerable near multi-month low

The EUR/USD pair struggles to capitalize on the overnight bounce from the 1.1530 region, or the lowest level since November 2025, and lower for the third consecutive day on Wednesday. Spot prices slide back below the 1.1600 mark during the Asian session and seem vulnerable to slide further.

GBP/USD slips below key averages as geopolitical risks mount

GBP/USD fell about 0.35% on Tuesday, settling around 1.3350 after slipping below the 200-day Exponential Moving Average for the first time since early December. The pair has pulled back sharply from its late-January high near 1.3870, shedding over 500 pips in a series of lower highs and lower lows.

Gold bounces back toward $5.200 amid sustained safe-haven flows

Gold bounces back toward $5,200 in Wednesday's Asian session, moving away from an over one-week low. Sustained safe-haven flows, amid escalating geopolitical tensions in the Middle East, act as a tailwind for the bullion. However, a bullish US Dollar and reduced bets for more aggressive easing by the US Fed might keep a lid on the non-yielding yellow metal ahead of the US ADP report and ISM Services PMI data due later in the day.