Gold is heading for its steepest quarterly decline in more than a decade, dropping around 24% from its record high reached in late January. The precious metal has been pressured by a stronger U.S. dollar and growing expectations that the Federal Reserve may keep interest rates higher for longer.

With U.S. inflation concerns persisting, investors have raised expectations for tighter monetary policy, boosting Treasury yields and the dollar. Since gold does not generate interest income, higher real yields have reduced its appeal, pushing prices below the key $4,000 level for the first time since late 2025.

Market sentiment has also turned increasingly bearish. Options traders are paying more to protect against further declines than to bet on gains, reflecting the weakest outlook for gold since 2016.

Despite the recent selloff, Goldman Sachs remains optimistic over the longer term. The bank expects gold to recover toward $4,900 per ounce by the end of 2026, supported by continued purchases from central banks seeking to diversify reserves away from the U.S. dollar.

Attention now turns to upcoming U.S. employment data, including ADP payrolls and the Nonfarm Payrolls report. Stronger-than-expected labor figures could reinforce expectations of tighter Fed policy, strengthening the dollar further and placing additional pressure on gold prices.