Gold prices fell more than 1% on Tuesday, heading for their steepest monthly decline since October 2008, as easing concerns over the Middle East conflict gave way to expectations of higher US interest rates to curb inflation, according to Reuters. Spot gold was down 1% at $3,975.04 an ounce as of 0420 GMT, taking its losses for June to 12.4% and putting it on track for a fourth straight monthly decline. US gold futures for August delivery slipped 1.2% to $3,988.60.
Biggest quarterly drop since 2013
Bullion was also on course for its first quarterly decline since 2024 and its biggest quarterly fall since the June quarter of 2013, as the Iran conflict pushed up energy prices, fuelling inflation concerns and strengthening expectations of US interest rate hikes, Reuters reported. "You have high inflation, high interest rate expectations, and a strong dollar, and that's overriding all other bullish factors that are typically associated with a gold rally," Edward Meir, an analyst at Marex told Reuters. Gold is traditionally considered a hedge against inflation, but higher interest rates reduce the appeal of the non-yielding asset.
Focus shifts to Fed and jobs data
Markets are now pricing in three US Federal Reserve rate hikes this year, with traders assigning about a 64% probability of a September increase, according to the CME FedWatch Tool. Investors are also awaiting the US ADP employment report and nonfarm payrolls data later this week for further clues on the Federal Reserve's policy path, Reuters reported.
Dollar strength weighs on bullion
The US dollar strengthened and was headed for a second straight monthly gain, making dollar-priced gold more expensive for buyers using other currencies, according to Reuters. Oil prices, meanwhile, were on track for their sharpest quarterly decline since 2020 as markets watched the outcome of possible US-Iran talks in Doha, even though Iran said no meeting had been scheduled.
Analyst outlook
"Gold bulls need at least one of three things to improve: lower real yields, a softer $ or a clearer unwind in hawkish Fed expectations. Without that, rallies are likely to be faded and gold may spend more time consolidating below previous highs," Christopher Wong, precious metals strategist at OCBC said in a note, quoted by Reuters.
Other precious metals
Spot silver fell 1.6% to $57.35 an ounce, platinum slipped 0.5% to $1,566.90, while palladium rose 0.5% to $1,219.55. All three metals were also on track for monthly and quarterly losses, according to Reuters.
| Metal | Last Price | Daily Change | June Change |
|---|---|---|---|
| Spot Gold | $3,975.04/oz | -1.0% | -12.4% |
| US Gold Futures (Aug) | $3,988.60 | -1.2% | — |
| Spot Silver | $57.35/oz | -1.6% | — |
| Spot Platinum | $1,566.90 | -0.5% | — |
| Spot Palladium | $1,219.55 | +0.5% | — |
For commodity traders and analysts, the key takeaway is that gold's traditional safe-haven bid has been fully offset by hawkish Fed expectations and a strong dollar. Without a shift in real yields, USD direction, or Fed policy guidance, gold may remain under pressure. The upcoming US payrolls data will be critical for near-term price direction.
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