Gold Experiences Record Plunge in March Amid Global Sell-Off

Gold prices fell sharply by 12% in March, marking the weakest month since 2013. The decline was attributed to global ETF outflows, a price trend reversal, and COMEX net long unwind. Despite this drop, early April indicators show positive ETF flows, suggesting investor optimism remains.

The World Gold Council (WGC) has reported a significant 12 percent drop in gold prices in March, bringing the price to USD 4,608 per ounce, its weakest point since June 2013. This decline was observed across all major currencies, although the precious metal has retained a positive position for the year.

The council's monthly Gold Return Attribution Model (GRAM) attributed much of the decline to momentum factors, particularly global gold ETF outflows, a COMEX net long unwind, and a reversal in price trends. COMEX, Commodity Exchange Inc., is the primary market for trading metals including gold, silver, copper, and aluminum.

According to the report, global gold ETFs shed USD 12 billion (84 tonnes) during March, predominantly led by outflows from North America and Europe, although Asia saw inflows of USD 1.9 billion, highlighting the region's buying interest. Further pressures were created by a build-up in retail exposure to gold and substantial liquidations by Commodity Trading Advisors (CTAs), exacerbated by broader cross-asset deleveraging activities.

The report further elaborated on central bank activities, particularly by The Central Bank of the Republic of Turkiye, which used gold as collateral, fueling selling rumors that increased pressure on prices. Meanwhile, US bond market dynamics reflected broader market trends, reinforcing liquidation pressures on gold.

Looking forward, the WGC anticipates a reassertion of fundamentals, with the dollar's strength waning and early April showing positive ETF flows. While oil prices and cross-asset deleveraging remain risks, the medium-term outlook for gold remains optimistic among investors.