Spot gold prices slipped below a key psychological level of US$4,000 per ounce level for the first time since November 2025 on Wednesday, under pressure from a firmer U.S. dollar and growing expectations that interest rates will remain elevated.
The U.S. dollar firmed, making dollar-priced bullion more expensive for holders of other currencies.
Traders have ramped up bets on U.S. interest rate hikes this year after the U.S. central bank struck a hawkish tone at its latest policy meeting and as fears of inflationary pressures stemming from the Iran war persisted.
“The market pricing a rate hike as soon as September due to a hawkish Fed, a surging dollar at 13-month highs combined with lower inflation expectations are putting heavy pressure on precious metals,” Tai Wong, an independent metals trader, said.
“For gold, there is support just under $3,900 and central bank purchases continue, so a collapse is unlikely, but expect a potentially long period of consolidation as the gold trade is now out of favour,” he added.
Gold becomes less attractive to investors when interest rates rise because it offers no yield.
Spot gold, which scaled a record peak of $5,594.82 in late January, has since shed more than $1,500 an ounce.
ING analysts cut their gold forecasts, now expecting prices to average $4,300 an ounce in the third quarter of 2026 and $4,600 in the fourth, compared with their previous projections of $4,850 and $5,000, respectively.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Andrew Heavens)
