Gold Slides >3% Amid Fed Hike Fears

Gold Slides >3% Amid Fed Hike Fears

Spot gold was down 0.6% at $4,186.99 per ounce as of 22:27 ET (02:27 GMT), positioning the metal for a second consecutive weekly decline of more than 3%. The drop was attributed to persistent inflation concerns and growing expectations that the U.S. Federal Reserve may resume interest‑rate hikes later in the year.

U.S. gold futures for December delivery rose 2.2% to $4,206.80, buoyed by renewed optimism of a U.S.–Iran peace agreement after President Donald Trump indicated that Washington and Tehran could sign a deal as early as the upcoming weekend, potentially reopening the Strait of Hormuz. Iranian officials, however, clarified that no final agreement had been reached, leaving regional outlook uncertainty.

The broader market reacted positively to the diplomatic optimism: oil prices fell sharply and global equity markets rallied.

Gold, traditionally a hedge against inflation and geopolitical risk, has been pressured as higher interest rates increase the opportunity cost of holding a non‑yielding asset, making interest‑bearing assets comparatively more attractive.

Fresh U.S. economic data showed producer‑price inflation in May rising more than expected, marking the largest annual increase in three‑and‑a‑half years. This development pushed market participants to price roughly a 60% probability of a Federal Reserve rate increase by December.

Among other precious metals, spot silver declined 0.5% to $67.00 per ounce, while platinum advanced 0.6% to $1,734.08 per ounce.