Gold Under Pressure from US Dollar and Fed Expectations
Gold prices continued their decline on Thursday, hovering near their lowest level in more than seven months. The main pressure came from the strengthening US dollar and growing expectations that the Federal Reserve is still likely to tighten its monetary policy this year.
Spot gold prices fell 0.2% to US$3,992.60 per troy ounce at 5:56 a.m. ET (09:56 a.m. GMT). Meanwhile, US gold futures were relatively stable at US$4,008.22. Gold had previously fallen below the psychological level of US$4,000 per troy ounce on Wednesday, for the first time since November 2025.
Gold's decline deepened as the US dollar held at its highest level in 13 months after strengthening for six consecutive sessions. This was supported by growing speculation that the Fed could raise interest rates again. According to CME FedWatch, the market is pricing in a roughly one-third chance of a rate hike in July and a 66% chance of a September rate hike.
A strengthening US dollar makes gold more expensive for buyers using other currencies. At the same time, the prospect of higher interest rates also reduces gold's appeal, as the precious metal offers no yield. ING analysts believe gold's decline reflects a shift in market focus, from demand for safe assets to concerns about high interest rates and tighter financial conditions.
In addition to interest rates, easing geopolitical tensions have also reduced support for gold. Progress in peace efforts between the United States and Iran, along with falling oil prices, has reduced the risk premium that previously supported gold. Investors are now awaiting the release of US Personal Consumption Expenditures (PCE) data, the Fed's preferred inflation indicator, for clues on the direction of future monetary policy.
In other precious metals markets, silver prices edged up 0.1% to US$57.50 per troy ounce after previously falling more than 6%. ING analysts believe the silver market still has the potential to experience a deficit, but several factors supporting demand are starting to weaken. Meanwhile, platinum prices fell 0.3% to US$1,581.60 per troy ounce after falling 4.5% in trading on Wednesday.
For industrial metals, the benchmark copper futures contract on the London Metal Exchange rose 1.7% to US$13,255.95 per ton. Meanwhile, US copper futures rose 1.6% to US$6.04 per pound. These movements indicate that significant pressure remains more pronounced on gold and some precious metals, while copper is starting to receive support from more positive market sentiment. (gn)
Source: Newsmaker.id
