Gold has extended its losing streak to three consecutive sessions and weeks, dropping more than 2% as markets digest shifting dynamics around US-Iran diplomatic negotiations and Federal Reserve monetary policy expectations. The precious metal is facing sustained pressure as investors recalibrate their positions based on the growing likelihood that the Fed will maintain elevated interest rates for an extended period.
The selloff reflects a broader shift in market sentiment, with higher-for-longer rate expectations strengthening the dollar and increasing the opportunity cost of holding non-yielding assets like gold. Simultaneously, reduced geopolitical risk premium from progress in US-Iran talks has removed a key support factor for safe-haven demand. Traders and brokers should note that gold’s traditional inverse relationship with real yields is reasserting itself as rate cut expectations fade.
FXnCO Insight
Market participants holding gold positions should prepare for continued pressure as long as Fed hawkishness persists, with key support levels becoming critical for tactical positioning decisions.
Source: FXStreet