Gold Hits Six-Month Low Weighed Down by USD, Hawkish Fed
Gold prices fell to a six-month low on Thursday (June 11), erasing all gains so far this year. XAU/USD briefly fell to US$4,023/oz, its lowest level since November 2025, before settling flat at around US$4,080/oz.
The main pressure came from a combination of increasingly hawkish central bank expectations, a strengthening US dollar, and technical selling. In a defensive market, investors often prefer the dollar as a safe haven asset over gold, especially since the dollar is still supported by the prospect of higher interest rates.
The US-Iran war has again tested gold's safe-haven status. Despite escalating Middle East tensions, gold has fallen around 25% since the war began in late February and nearly 27% from its January high of around US$5,600/oz. This means the market is more focused on the impact of inflation and interest rates than on geopolitical risks themselves.
The fundamental path is clear: the Middle East conflict is driving up oil prices, which in turn is fueling inflationary pressures. US inflation rose from 2.4% in January to 4.2% in May, the highest since April 2023. This condition has led the market to believe that the Fed could maintain a tight policy or even raise interest rates this year.
The latest US PPI data reinforces this picture. The Producer Price Index rose 6.5% year-on-year in May from 5.7% in April, slightly above the 6.4% forecast. However, the core PPI remained at 4.9%, lower than the consensus of 5.4%. Despite the more benign core data, underlying price pressures remain high as energy remains a key risk.
For gold, high interest rates are a significant burden because this metal offers no yield. When yields and the dollar are more attractive, demand for gold tends to be restrained. For now, the direction of XAU/USD still depends on US-Iran developments, oil prices, the direction of the dollar, and whether subsequent inflation data continues to strengthen the case for a Fed rate hike.
Source: Newsmaker.id
