Gold drops below US$4,000 as dollar and Fed pressure bite
Gold fell below US$4,000 an ounce as a stronger dollar and hawkish Fed signals raised expectations that US rates may stay high
Gold prices fell below US$4,000 an ounce on Wednesday, breaking through a closely watched level as a stronger US dollar and renewed expectations of higher interest rates took pressure off one of this year’s biggest market winners.
Spot gold slipped under the psychological threshold for the first time since November 2025, as dollar strength made bullion more expensive for buyers using other currencies.
The pullback came as investors reassessed the outlook for US monetary policy after the Federal Reserve struck a hawkish tone at its latest meeting. Traders have increased bets that the US central bank could raise interest rates this year, with inflation concerns linked to the Iran war adding another layer of uncertainty.
Strong dollar weighs on bullion
Gold, which pays no interest, tends to lose appeal when rates rise or are expected to remain elevated. A stronger dollar also reduces demand from overseas buyers by raising the cost of dollar-denominated commodities.
Tai Wong, an independent metals trader, said market pricing for a possible rate increase as early as September, together with a surging dollar at 13-month highs, was putting heavy pressure on precious metals.
He said gold still had support just below US$3,900 an ounce and that central bank purchases remained a stabilising force, making a sharp collapse less likely. However, he warned that bullion could face a prolonged period of consolidation as investor appetite weakens.
Gold retreats from January record
The decline marks a sharp reversal from gold’s record run earlier in the year. Spot gold hit an all-time high of US$5,594.82 an ounce in late January, but has since lost more than US$1,500.
The fall reflects a broader change in market sentiment. Earlier demand for safe-haven assets has been tempered by expectations that US rates could remain high for longer, while the dollar’s strength has made it harder for gold to regain momentum.
ING cuts gold forecasts
ING analysts lowered their gold price forecasts, now expecting bullion to average US$4,300 an ounce in the third quarter of 2026 and US$4,600 in the fourth quarter.
Those projections were cut from previous forecasts of US$4,850 for the third quarter and US$5,000 for the fourth quarter, underlining the weaker short-term outlook for the metal.
Despite the drop, analysts are not treating the move as a complete breakdown in gold’s longer-term support. Continued central bank demand remains an important cushion, but the market’s near-term direction is likely to depend heavily on the dollar, inflation expectations and the Fed’s next policy signals.
