Gold’s historic rally has lost momentum — not because geopolitical tensions have eased or investor fear has evaporated, but due to a more enduring force: a firmer U.S. dollar and a Federal Reserve that markets believe is in no rush to cut rates. Bullion dropped more than 2% to roughly $4,870 per ounce on Tuesday, deepening a pullback that has wiped out nearly 9% from the January 29 record high of $5,354.80. Gold futures slid over 3% at one stage to $4,878.90, falling below the psychologically important $5,000 mark that had underpinned sentiment. Silver fared even worse, tumbling 7.2% to $72.33 — about 37% beneath its own January peak of $115.50. The immediate driver of the decline was a stronger U.S. Dollar Index, which rose 0.6% to 97.49. A firmer dollar makes commodities priced in the currency more expensive for international buyers and diminishes the appeal of non-yielding assets such as gold. The greenback’s rebound reflects shifting expectations around monetary policy. While softer inflation data in January briefly fueled hopes of multiple rate cuts in 2025, subsequent releases — including solid job growth, resilient private hiring, and steady GDP projections — have reduced the urgency for Federal Reserve easing. That has supported U.S. rate differentials and, in turn, the dollar. Seasonal dynamics have added to the downward pressure. China’s Lunar New Year holiday has temporarily curbed demand from one of the world’s largest physical gold consumers, removing a key source of support just as financial flows turned negative. Geopolitical tensions remain in play. Ongoing U.S.-Iran nuclear talks and negotiations between Russia and Ukraine continue to lend some underpinning to safe-haven demand, and any deterioration could quickly revive gold’s defensive appeal. Still, as Forex.com analyst Fawad Razaqzada noted, the near-term outlook appears somewhat bearish after recent volatility, with upcoming data likely to keep prices range-bound rather than driving a clear breakout. More broadly, this correction has been driven primarily by currency movements rather than geopolitical developments. As long as the dollar stays firm and rate expectations remain elevated, gold’s safe-haven narrative may struggle to regain dominance. The next direction will hinge on signals from the Fed and whether economic data begins to weaken enough to shift policy expectations.