Global
gold prices fell to a six-month low as inflation concerns rose. Gold futures for August delivery fell at one point to 4,046.20 USD per ounce, the lowest since November 2025. For the week, gold prices have fallen about 6.3%, heading for the second straight weekly decline and the largest weekly drop since mid-March, when the precious metal tumbled 9.62%.
By the close, August gold was down 0.5% at 4,111.10 USD per ounce.
Fed rate expectations weigh on gold. Gold is traditionally seen as a safe-haven asset during times of uncertainty and a hedge against inflation. However, because it yields no interest, gold tends to face pressure when real rates rise.
The US-Iran conflict has entered its fourth month, pushing energy prices higher and adding to inflationary pressures globally.
In the US, May inflation rose to the highest in three years, mainly due to stronger energy costs. Along with a better-than-expected jobs report, many investors began to believe the Fed may have to raise rates again later this year to curb price gains.
The Fed is expected to keep the policy rate at 3.50%-3.75% at next week's meeting, the first policy gathering under new chair Kevin Warsh.
A Reuters survey shows most economists now expect the Fed not to cut rates this year, contrary to earlier-year expectations.
Meanwhile, CME Group's FedWatch tool shows the market is pricing about a 67% chance the Fed will raise rates in December.
Higher rates typically make US government bonds and dollar-denominated assets more attractive, reducing gold's appeal.
Technical signals have turned negative. Recently, gold breached the 200-day moving average for the first time since September 2023. Citi views this as a key negative development. The bank has remained cautious on gold since the Middle East tensions escalated in March, partly due to higher energy prices after the Hormuz Strait was blocked. Nevertheless, Citi remains optimistic about gold's long-term prospects.
“While the near-term outlook remains challenging, the longer-term view remains positive due to secular demand, geopolitical risk diversification, debt concerns, and central-bank reserve diversification,” Citi analysts said.
Investors have been pulling back from hedges against currency depreciation. JPMorgan notes a wave of outflows from so-called “debasement trades”—strategies to hedge against currency depreciation from inflation and rising debt. The bank said the trend began a few weeks ago and has continued.
Outflows from gold ETFs and a reduction in futures positions reflect growing concerns about the budget deficit, long-term inflation, and geopolitical risk. According to JPMorgan, gold ETFs recorded net outflows of about $20 billion in the week ending June 5, after attracting only modest inflows the prior week.
In the futures market, investors have also continued to scale back positions in gold. JPMorgan says the process began in late February and has been steady since mid-April.
Despite the near-term pressure, many major financial institutions still believe safe-haven demand amid geopolitical risks and reserve diversification will support gold prices in the long run.
