Gold Price Battered, Records Worst Performance in 13 Years
Jakarta, CNBC Indonesia - Gold prices have yet to recover, having plunged almost 7% throughout the first half of the year. Inflation fears stemming from conflict in the Middle East are reinforcing expectations that the US Federal Reserve will raise interest rates again.
According to Refinitiv, the price of gold at the end of the first half, on Tuesday (30/6/2026), closed at US$4,007.23 per troy ounce, down 0.22%. This decline extended the precious metal’s misery, with a 2% drop over the last two days. On Wednesday (1/7/2026) at 06.02 Western Indonesia Time, the gold price was at US$4,012.02 per troy ounce, strengthening by 0.12%.
Throughout the first half of 2026, the gold price has collapsed by 7%. The quarterly performance is even worse, entering its deepest slump since the second quarter of 2013, or 13 years ago. The precious metal recorded its first quarterly decline since 2024 and the steepest since Q2 2013, when conflict in the Gulf region sparked inflation worries.
Although gold is known as an inflation hedge, rising interest rates tend to suppress the appeal of the non-yielding asset. “The market remains somewhat uneasy about how stable the memorandum of understanding (MOU) is, so pressure on gold remains high because market participants do not yet see a clear path forward,” said Marex analyst Edward Meir to Refinitiv.
A senior US envoy who arrived in Doha is confirmed not to be holding high-level meetings with Iran, according to a Qatari official. This development has cast doubt on progress towards permanently ending the war with Iran. Meir added that US inflation remains persistently high and well above the Fed’s 2% target.
The market now expects the US central bank to keep interest rates higher for longer and is even leaving the door open for additional rate hikes. These expectations are a key factor weighing on gold prices. Based on the CME FedWatch Tool, market participants see a roughly 67% probability that the Fed will raise interest rates at its September meeting.
Investors are now awaiting the ADP employment data, scheduled for release on Wednesday, as well as the nonfarm payrolls data on Thursday, for further clues on the direction of the Fed’s monetary policy. Meanwhile, a survey by the Official Monetary and Financial Institutions Forum (OMFIF) indicates that global central banks are likely to reduce their exposure to the US dollar over the next decade due to rising geopolitical risks, while increasing their gold holdings in the short term.