Gold Falls Below $4,000 as Fed Rate Hike Bets Weigh on Prices

TLDR

• Gold dropped below $4,000 per ounce for the first time since November 2025
• The metal has lost nearly 30% from its January record high of $5,595.46
• A 13-month high dollar is making gold more expensive for overseas buyers
• Markets price in a 66% chance of a Fed rate hike by September
• Easing geopolitical tensions have also reduced safe-haven demand for gold

Gold prices are hovering near a seven-month low as a strong U.S. dollar and growing Federal Reserve rate hike expectations continue to weigh on the metal.

Spot gold slipped 0.2% to $3,984.83 an ounce on Thursday. U.S. Gold Futures traded near flat at around $4,008.

Gold broke below the key $4,000 mark on Wednesday for the first time since November 2025. That level had been watched closely by traders as a line of support.

The metal has now fallen nearly 30% from its record high of $5,595.46 set in January 2026. That is a steep drop in a short period of time.

The U.S. dollar has been a major driver of the selloff. The greenback is sitting at a 13-month high after six straight sessions of gains.

A stronger dollar makes gold more expensive for buyers using other currencies. That tends to reduce demand for the metal.

Fed Rate Hike Bets Weigh on Gold

Markets are now pricing in about a one-third chance of a rate hike in July. The odds rise to 66% for a move by September, according to CME FedWatch data.

Higher interest rates hurt gold because the metal pays no yield. When rates go up, investors can earn more from bonds and cash, making gold less attractive to hold.

ANZ analysts said concerns about persistently higher inflation have led to a “re-rating of monetary policy expectations.” They added that the Fed’s hawkish stance appears to have “derailed the debasement trade” that had benefited gold.

ING analysts said gold’s weakness shows how markets have shifted focus away from safe-haven demand toward the impact of higher rates and tighter financial conditions.

Geopolitical Risks Also Fade

Easing tensions in the Middle East have also played a role. Progress in U.S.-Iran peace talks has reduced some of the risk premium that had supported gold prices earlier this year.

Lower oil prices have added to that shift. Investors have less reason to buy gold as a hedge when geopolitical risks appear to be cooling.

Traders are now watching Friday’s U.S. Personal Consumption Expenditures data closely. The PCE is the Fed’s preferred inflation measure and could shape expectations for future rate moves.

Silver edged up 0.1% to $57.50 per ounce on Thursday, after falling more than 6% the session before. ING noted that some of silver’s strongest demand drivers are becoming less supportive.

Platinum slipped 0.3% to $1,581.60 an ounce. Copper futures rose around 1.7% on the London Metal Exchange to $13,255.95 a ton.

Gold remains under pressure with no clear catalyst to reverse the trend before the PCE data arrives.

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