Gold Heads for Biggest Quarterly Drop in 13 Years
Gold prices headed for their biggest quarterly decline since 2013 on Tuesday (June 30th). Pressure arose as market concerns grew over stubbornly low inflation and the prospect of further interest rate hikes clouded the precious metal's movement.
Spot gold edged up 0.1% to US$4,197.54 per ounce at 5:48 a.m. ET (9:48 a.m. GMT). Meanwhile, gold futures fell 0.2% to US$4,033.05 per ounce. Throughout June, spot gold has weakened more than 11% and is poised for a fourth consecutive monthly decline.
Trade Nation Senior Market Analyst David Morrison believes the key question for market participants is whether gold prices have bottomed out after a five-month sell-off from their record high in late January, or whether they could still fall further.
Pressure on gold comes from a combination of high energy prices, disruptions from developments in artificial intelligence (AI), and persistently high inflation expectations this year. These conditions increase the likelihood of the Fed raising interest rates, which could negatively impact gold as the precious metal offers no yield.
On the other hand, energy prices have indeed fallen to near pre-conflict levels following the interim peace agreement between the US and Iran. However, uncertainty in the Middle East has not completely subsided, especially after the re-emergence of military tensions over the weekend. Technical talks between the two sides are scheduled to take place in Qatar this week.
The strengthening US dollar also weighed on gold prices. The dollar strengthened as market confidence grew that the Federal Reserve would raise interest rates at least once this year. At its June meeting, the US central bank signaled a hawkish stance, with several officials opening the door to a rate hike to curb inflation.
Meanwhile, OCBC analysts cut their gold and silver price projections for this year due to the pressure of high interest rates and more challenging macroeconomic conditions. OCBC lowered its gold price projection for the end of 2026 to US$4,360 per ounce from US$5,100 per ounce, while its silver projection was cut to US$67 per ounce from US$89.5 per ounce.
Source: Newsmaker.id
