Crash! Gold Prices Plummet Again, Here's Why
Jakarta — Gold prices fell amid renewed tensions in the Middle East, which have triggered inflation concerns and reinforced expectations that central banks will maintain tight monetary policy for longer.
According to Refinitiv data, gold prices closed at US$4,483.29 per troy ounce on Monday, 1 June 2026, a sharp decline of 1.1%. This drop reversed gains from the previous two consecutive trading days.
Yesterday’s closing price also marked the lowest level since 27 May 2026.
Gold prices began to recover on Tuesday, 2 June 2026 at 06:35 WIB, trading at US$4,485.09 or strengthening by 0.04%.
The collapse in gold prices was driven partly by a rise in the dollar index, which reached 99.2, jumping from the end-of-May level of 98. A stronger US dollar makes the metal, which is traded in that currency, more expensive for holders of other currencies.
“Expectations of higher interest rates remaining in place for longer will likely continue to pressure gold, unless bond yields stop rising and interest rates begin to stabilise or fall,” said Jim Wyckoff, market analyst at the American Gold Exchange, according to Refinitiv.
Iran stated it had attacked a US military airbase following a US strike on Iranian military targets over the weekend. However, US President Donald Trump indicated that talks with Iran were progressing “very quickly.”
Oil prices also rose, adding to inflation concerns stemming from the Iran conflict, which could prompt central banks to raise interest rates to combat price pressures.
Traders are now factoring in approximately a 54% probability that the United States will raise interest rates at least once by year-end, according to the CME Group’s FedWatch tool.
Although gold is often viewed as a hedge against inflation, its appeal tends to diminish when interest rates are high because gold yields no return.
Market participants are now awaiting a series of US employment data releases this week, as well as statements from Federal Reserve officials.
“Once the geopolitical situation stabilises and energy shocks begin to ease, we expect investors will refocus on structural factors supporting gold’s bullish trend over the past few years,” said Ole Hansen, analyst at Saxo Bank.
He added that central banks are expected to remain net buyers of gold over the next year.