Gold prices drop to two-month low amid inflation and Fed rate hike concerns
NEW YORK - World gold prices fell to a two-month low by the end of Wednesday’s (27 May 2026) local trading session, or early Thursday (28 May 2026) WIB, pressured by rising inflation concerns and expectations of higher interest rates amid the ongoing Iran conflict.
Spot gold dropped 1.3% to $4,447.71 per ounce, having touched its lowest level since 27 March 2026 during earlier trading, according to Reuters. US gold futures for June delivery fell 1.2% to $4,448.40 per ounce.
Grant added that the prolonged conflict has exacerbated global inflation worries. “The ongoing conflict has heightened inflation concerns,” he said.
Gold prices have remained under pressure since the US and Israel’s war against Iran erupted in late February 2026. The effective closure of the Strait of Hormuz triggered a surge in Brent crude oil prices, worsening inflation fears and boosting expectations of rate hikes by the US Federal Reserve.
Iran’s state media reported that Tehran will restore shipping activity in the Strait of Hormuz to pre-war levels within a month as part of a deal with the US, which also includes the withdrawal of US troops from around Iran. The report briefly eased gold’s decline, though markets still anticipate inflation from energy price surges prompting the Fed to raise rates by 25 basis points by year-end.
Gold is known as an inflation hedge, but precious metals tend to be pressured when interest rates are high due to their lack of yield.
Meanwhile, Minneapolis Fed President Neel Kashkari said the US central bank must focus on controlling rising inflation risks, though it is too early to predict when rate changes might occur.
Market participants are now awaiting the release of this week’s US Personal Consumption Expenditures (PCE) data for clues on the Fed’s next monetary policy direction.
Silver spot prices fell 3.2% to $74.46 per ounce, while platinum dropped 2.1% to $1,916.90 per ounce. Palladium, however, edged up 0.1% to $1,386.47 per ounce.