Gold Set for Fourth Weekly Loss as Fed Rate Hike Expectations Weigh on Prices

Gold prices are facing downward pressure, poised to record a fourth consecutive weekly decline, primarily driven by a robust U.S. dollar and expectations of accelerated rate hikes by the Federal Reserve to combat inflationary pressures. As of 0610 GMT on Friday, spot gold was trading at $4,007.95 per ounce, marking a 0.5% drop, while August U.S. gold futures were down 0.6% at $4,024.10. This week’s performance suggests a loss approaching 4%, a significant development underscoring the metal’s retreat below the $4,000 threshold for the first time since November 2025.

Market analysts, including Kelvin Wong from OANDA, attribute this decline to a rapid reassessment of the Fed’s hawkish stance, which has bolstered the U.S. dollar and subsequently diminished gold’s allure as a non-yielding asset. Historical data reveals a nearly 29% drop in gold prices from its January record high of $5,594.82, significantly influenced by inflationary pressures exacerbated by geopolitical tensions. The spike in U.S. inflation in May, surpassing 4% for the first time in three years, has amplified market speculation regarding the Fed’s policy direction, with traders anticipating at least three rate hikes this year, including a 64% likelihood of an increase in September.

As the dollar’s strength continues to exert influence, gold’s role as an inflation hedge appears under threat, leading to expectations of further price declines. Notably, other precious metals have also faced similar challenges, with spot silver declining 2.5% to $56.42 per ounce, platinum losing 1.5% to $1,577.15, and palladium down 0.4% to $1,179.26. The consistent downward trajectory amongst these metals indicates a broader bearish trend within the commodities market that investors should closely monitor in the coming weeks.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)