Gold Price Plummets to US$4,000 Level Amid Fed and Geopolitical Pressures

Gold prices weakened on Tuesday, closing at US$4,105.7 per troy ounce, a drop of 1.39%, as investors assessed increasing tensions in the Middle East and awaited the release of the Federal Reserve’s meeting minutes. The decline extended the precious metal’s losses to 1.7% over two trading days, with prices falling further on Wednesday morning to US$4,096.72 per troy ounce, dragging gold back to the US$4,000 level. The metal had hit a two-week high on Monday after weaker-than-expected US employment data prompted markets to scale back expectations of near-term interest rate rises. However, Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, noted that the market is beginning to recognise the Fed’s persistent focus on controlling inflation, making a higher-for-longer interest rate scenario the most likely policy path. According to the CME FedWatch Tool, market participants still see around a 60% chance of a rate hike at the September meeting. Attention is now turning to the release of the Fed’s meeting minutes. In the Middle East, two tankers were attacked in the Strait of Hormuz, and Iran stated it would not continue peace negotiations as long as US President Donald Trump persists with threats of continued war. The news pushed oil prices higher, reigniting inflation concerns linked to rising energy costs. Gold typically comes under pressure when inflation fears keep interest rates elevated, as this reduces the appeal of non-yielding assets. Meanwhile, China’s central bank continued its gold purchases for the 20th consecutive month, with reserves reaching 75.44 million fine troy ounces at the end of June, up from 74.96 million ounces the previous month. Separately, Hong Kong launched a centralised clearing system for gold trading and reactivated gold futures trading as part of its efforts to become a regional gold storage hub.