Gold prices slumped toward the $4,000 psychological level during early Asian trading Monday, continuing a bruising second quarter that saw the precious metal shed 14 percent, marking its worst quarterly performance since 2013. The decline comes as escalating US-Iran tensions are strengthening market expectations for Federal Reserve rate hikes, diminishing gold’s appeal as a non-yielding safe haven asset.
The yellow metal has struggled to maintain momentum in recent weeks, trapped near the $4,000 mark as traders recalibrate positions amid shifting geopolitical and monetary policy landscapes. Higher interest rate expectations typically pressure gold since the metal generates no income, making yield-bearing alternatives more attractive. The combination of geopolitical risk premium fading and hawkish Fed bets is creating a challenging environment for precious metals bulls.
Traders holding long gold positions face continued pressure while those in currency markets should monitor USD strength as rate hike expectations build.
FXnCO Insight
Gold’s breakdown below $4,000 support could trigger additional selling pressure, while rising Fed rate expectations suggest traders should favor dollar-denominated assets over non-yielding commodities.
Source: FXStreet