Gold has recently dipped below the $3,300 per ounce mark, and many investors are starting to question what’s driving this latest pullback. The short answer: a stronger U.S. dollar and waning demand for safe-haven assets.

The dollar’s rebound has been the primary headwind for gold. Progress in U.S.-EU trade talks has boosted market risk appetite, reducing demand for defensive assets like gold. In parallel, Japan’s Ministry of Finance signaled plans to cut back on government bond issuance—a move that sent the yen tumbling against the dollar. This, in turn, has strengthened the dollar broadly against major currencies, making dollar-denominated gold more expensive for international buyers. As a result, we’re starting to see a cooling of global demand and increased downward pressure on prices.

Not long ago—in late April—gold had just hit a record high, approaching $3,500 an ounce. Back then, concerns over global policy uncertainty and geopolitical risks pushed investors toward gold. But as U.S. equities began to recover and the dollar stabilized, some speculative money started to exit, slowing the momentum behind gold’s rally. Many analysts had already flagged that gold was overbought in the short term, so a technical correction didn’t come as much of a surprise.

What’s next? While short-term pressures remain, the outlook for the medium and long term still looks constructive. Major institutions including Goldman Sachs, UBS, and ANZ continue to hold a bullish stance on gold. Persistent inflation concerns, continued central bank purchases, and ongoing global economic uncertainties all suggest that gold could eventually find its way back into the $3,400–$3,600 range.

That said, it won’t be a one-way street. If the Fed adopts a more hawkish tone or if the dollar gains further strength, gold could face more headwinds.

Bottom line: This recent dip in gold reflects improving investor sentiment and rising risk appetite. But given the persistent global uncertainties, gold’s role as a long-term hedge remains intact. For investors, keeping a close eye on the dollar, central bank policy shifts, and geopolitical developments will be key to navigating the market going forward.