The metal has declined about 15 per cent since a brief surge on March 2, when prices climbed to around US$5,300 per ounce following US and Israeli strikes on Iran. A modest rebound driven by technical buying on Friday did little to alter the broader downtrend, with prices ultimately falling to the US$4,500 level.

Lynn Song, chief economist for Greater China at ING, described the downturn as “a bit of a pullback” following an overheated rally. Higher oil prices, which had contributed to a more hawkish global central bank outlook, had also weighed on gold, Song said, noting that the metal was a non-yielding asset.

Typically, a surge in oil prices fuels inflation, erodes the value of fiat currencies and supports gold as a key real asset. This time, however, the US Federal Reserve’s delay in cutting rates has dampened investor sentiment. On Wednesday, the central bank held its benchmark rate steady at between 3.50 and 3.75 per cent, while projecting higher inflation amid economic uncertainty linked to the conflict.

At the same time, a stronger US dollar has added further pressure, according to a March 12 note from Swiss private bank Union Bancaire Privee (UBP). The US dollar, which also serves as a safe-haven asset, has gained more than 2 per cent this month.