Gold prices have plunged over 10% since Morgan Stanley's analysis last week, defying initial spikes during Middle East conflicts. The decline stems from rising inflation expectations and anticipated Federal Reserve rate hikes, which increase the opportunity cost of holding non-yielding assets like gold. While geopolitical risk once drove demand, the traditional link between long-term real interest rates and gold prices has weakened since the Ukraine invasion, as central banks shift reserves away from the US dollar, fearing sanctions. Morgan Stanley analysts suggest the breakdown in this relationship means gold could fall further if rates decouple. The $53bn revaluation gain by Poland's central bank and potential Tether's $3bn market cap drop add two-way risk to central bank buying dynamics.