Gold Plunges 2%, Forecast to Hit US$3,500 Amid Rising Dollar and Iran Tensions
Gold prices have plummeted by almost 2%, hitting their lowest level in 11 weeks. The decline comes alongside a strengthening US dollar and rising oil prices, driven by the re-escalation of conflict between the United States and Iran. This situation has triggered concerns regarding inflation and potential interest rate hikes.
According to Refinitiv, as of Wednesday (10/06/202t6) at 11:32 WIB, gold prices stood at US$ 4,174.74 per troy ounce, representing a 2.05% drop. This weakness extends a period of decline for gold; on Tuesday (09/06/2026), prices closed at US$ 4,262.52 per troy ounce, a 1.53% decrease. This marks three consecutive days of losses, with a total decline of 4.7%.
The strengthening US dollar has made gold, which is traded in that currency, more expensive for holders of other currencies. Simultaneously, oil prices rose by 1%, heightening inflation fears and reinforcing expectations that interest rates will remain high for a longer period. The US dollar index is currently trading at 99.918.
“The main drivers are changes in expectations regarding Federal Reserve policy, rising bond yields, and the strengthening US dollar. All these factors are weighing on gold prices,” said Ilya Spivak, Global Macro Strategy Head at Tastylive, as quoted by Refinitiv.
On Tuesday, the United States launched attacks against Iran after President Donald Trump stated that Tehran had shot down a US Apache helicopter in the Strait of Hormuz. The incident has deepened doubts regarding the possibility of a peace agreement and further strained the fragile ceasefire.
According to the CME FedWatch tool, market participants now estimate a greater than 70% probability that the Federal Reserve will raise interest rates before December. Although gold is often regarded as a hedge against inflation, rising interest rates typically act as negative sentiment for the precious metal because gold provides no yield.
The market is now awaiting several key US inflation data points this week, including the May Consumer Price Index (CPI) to be released later today, and the Producer Price Index (PPI) on Thursday. This data will serve as a guide for the future direction of the Fed’s monetary policy.
“If gold prices break below the US$ 4,100 level, I believe the fundamental direction of its movement will change. We might begin to see US$ 3,500 as the next target towards the end of the year,” Spivak noted.