Gold prices slumped more than 3% to below $4,000 per ounce on Wednesday, marking their lowest level since November 2025. The metal came under pressure from a stronger US dollar and rising expectations that the Federal Reserve will maintain a hawkish policy stance, with traders increasingly positioning for an interest-rate hike later this year. Current market pricing implies roughly a 68% probability of a Fed rate increase in September, up sharply from 29% just a week earlier.
So far this year, bullion is down about 5% and is trading nearly 20% below its January record high, set shortly before the onset of the conflict involving Iran. Despite elevated geopolitical risks, gold has struggled to maintain its traditional status as a safe-haven asset during the war. A spike in oil prices has intensified inflation worries, prompting major central banks to pursue more restrictive monetary policies and thereby raising the opportunity cost of holding non-yielding assets such as gold.
