Gold Nears Seven-Month Low as Stronger U.S. Dollar and Hawkish Fed Pressure Prices
Gold prices extended their decline on Thursday, hovering near their lowest level in more than seven months, as a stronger U.S. dollar and growing expectations of further Federal Reserve tightening continued to weigh on demand for the non-yielding precious metal.
Spot gold fell 0.2% to $3,992.60 per ounce as of 16:56 WIB, while U.S. Gold Futures remained largely unchanged at $4,008.22 per ounce.
The precious metal dropped below the key $4,000-per-ounce level on Wednesday for the first time since November 2025. Gold has now lost nearly 30% of its value from the all-time high of $5,595.46 per ounce recorded in January.
Stronger Dollar and Fed Rate Hike Expectations Weigh on Gold
Gold’s latest weakness comes as the U.S. dollar remains near a 13-month high after posting gains for six consecutive trading sessions. The rally has been fueled by increasing speculation that the Federal Reserve could raise interest rates again later this year.
According to CME FedWatch data, markets are currently pricing in roughly a one-third probability of a rate hike in July and a 66% chance of additional monetary tightening in September.
A stronger dollar makes dollar-denominated gold more expensive for overseas buyers, while higher interest rates increase the opportunity cost of holding bullion, which does not generate interest income.
“Gold’s weakness highlights the extent to which markets have shifted their focus away from safe-haven demand and toward the implications of higher interest rates and tighter financial conditions,” ING analysts said in a recent report.
Easing Geopolitical Risks Reduce Safe-Haven Demand
The recent decline also reflects a broader reassessment of safe-haven demand. Reduced geopolitical concerns following progress in U.S.-Iran peace efforts, combined with lower oil prices, have diminished some of the risk premium that supported gold earlier this year.
Market participants are now awaiting the release of the U.S. Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge, for further clues regarding the future path of monetary policy.
Silver, Platinum, and Copper Market Update
Among other precious metals, silver edged up 0.1% to $57.50 per ounce after plunging more than 6% in the previous session.
“Although the silver market is expected to remain in deficit, some of its strongest demand drivers are beginning to lose momentum,” ING analysts added.
Meanwhile, platinum slipped 0.3% to $1,581.60 per ounce after tumbling 4.5% on Wednesday.
In the base metals market, benchmark copper futures on the London Metal Exchange rose 1.7% to $13,255.95 per metric ton, while U.S. copper futures gained 1.6% to $6.04 per pound.
XAU/USD Outlook
Gold traders remain focused on upcoming U.S. inflation data and Federal Reserve policy signals. Any indication of persistent inflationary pressures could strengthen expectations for further interest rate hikes, potentially keeping downward pressure on XAU/USD in the near term.
However, renewed geopolitical tensions, weaker economic data, or a shift toward a more dovish Fed stance could provide support for gold prices and revive safe-haven demand.