Gold prices remained under pressure on Thursday after slipping below the important $4,000-an-ounce level for the first time in more than seven months, as investors reacted to a stronger US dollar and growing expectations that interest rates could rise further this year.
Spot gold was trading at $3,980.73 per ounce by 06:33 pm PST, down nearly 4.9 percent on the day. The metal had already dropped below the $4,000 mark on Wednesday, a level it had held since November 2025.
The latest decline comes as the US dollar continues to strengthen, making gold more expensive for buyers using other currencies. A firmer dollar often reduces demand for bullion and adds pressure to prices.
Market sentiment has also been hit by expectations that the US Federal Reserve may keep monetary policy tight for longer than previously expected. Investors are increasingly betting on further interest rate increases after recent comments from Fed officials signalled concern about inflation.
According to the CME FedWatch Tool, traders are now pricing in three rate hikes this year, with around a 67 percent chance of an increase as early as September.
Analysts say concerns that inflation linked to the Iran conflict could remain elevated have strengthened the case for higher borrowing costs. While gold is often viewed as a hedge against inflation, it tends to lose appeal when interest rates rise because it does not offer any yield.
Independent metals trader Tai Wong said a combination of a hawkish Federal Reserve, a dollar near 13-month highs and easing inflation expectations was creating heavy pressure on precious metals.
He noted that gold could find support just below $3,900 per ounce. Wong also said continued buying by central banks may help prevent a sharp collapse in prices, although the metal could remain stuck in a longer period of weakness.
Gold has now fallen nearly 29 percent from its all-time high of $5,594.82 reached on January 29, wiping out more than $1,500 per ounce in value over the past five months.
Meanwhile, ING has lowered its gold price outlook, forecasting average prices of $4,300 per ounce in the third quarter of 2026 and $4,600 in the fourth quarter. Both estimates are below the bank’s previous forecasts.
Investors are now waiting for the latest US Personal Consumption Expenditures data, the Federal Reserve’s preferred inflation measure, which could provide fresh clues about the direction of interest rates and the outlook for gold.
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