Spot gold prices fell below $4,000 per ounce on Wednesday, pushed down by a firmer U.S. dollar and rising expectations for interest rate hikes. This marks the first time gold has traded below this key psychological level since November 2025. The U.S. dollar strengthened, making dollar-priced bullion more expensive for international buyers, contributing to gold's decline.
Traders have increased their bets on U.S. interest rate hikes this year following a hawkish stance from the U.S. central bank and persistent fears of inflationary pressures from the Iran war. Tai Wong, an independent metals trader, noted that the market is pricing in a rate hike as early as September, with a surging dollar at 13-month highs and lower inflation expectations collectively pressuring precious metals. Wong predicts support for gold just under $3,900 and continued central bank purchases, making a collapse unlikely, but anticipates a potentially long period of consolidation.
Gold, which reached a record peak of $5,594.82 in late January, has since shed over $1,500 an ounce. ING analysts have cut their gold forecasts, now expecting prices to average $4,300 an ounce in Q3 2026 and $4,600 in Q4, down from their previous projections of $4,850 and $5,000, respectively. Investors are also looking forward to the U.S. Personal Consumption Expenditures data, the Federal Reserve's preferred inflation measure, which is due to be released tomorrow for further indications on future monetary policy.
