Gold came under renewed selling pressure on Thursday after the release of Federal Reserve meeting minutes revealed a more aggressive policy stance than markets had anticipated. The precious metal slipped to $4,043.60 per troy ounce, extending its seven-day decline to 2.25% and leaving it 6.87% in the red since the start of the year. At its current level, the spot price sits roughly 28% below the 52-week high of $5,626.80 reached in January.
The catalyst for the latest leg lower was the publication of the Fed’s latest deliberations, which showed committee members discussing further tightening amid stubbornly high inflation. Chair Kevin Warsh remains steadfast in his commitment to the 2% target, and several policymakers signaled readiness to keep rates elevated for an extended period. Traders have now priced in a strong probability of a rate increase at the September meeting, with some even speculating about a move as early as July. The prospect of higher borrowing costs has crushed any lingering hope of near-term cuts that had buoyed gold earlier in the year, raising the opportunity cost of holding the non-yielding asset.
Underpinning the Fed’s hawkish tilt is a surge in energy-driven inflation. US consumer prices climbed to 4.2% in June — the highest reading in three years — fueled by the continued blockade of the Strait of Hormuz. The disruption, which began in late February, has kept oil and gas prices elevated, creating a vicious cycle: geopolitical turmoil normally drives investors into gold as a safe haven, but this time the resulting inflation has forced central banks to tighten policy, undermining the metal’s appeal.
The dollar’s strength has added another layer of headwinds. A firm greenback makes dollar-denominated gold more expensive for international buyers, compounding the drag from rising real yields. Volatility remains extreme, with gold accounting for 42% of total trading volume at broker Capital.com in the second quarter.
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Yet the selling has not been universal. While ETF investors have continued to exit — 16 tonnes flowed out of physically backed funds in May, and redemptions persisted into June — sovereign buyers have taken advantage of lower prices. Central banks added a net 244 tonnes of gold in the first quarter, led by Poland, Kazakhstan and Brazil, a trend that has provided a floor under the market. Still, some 298 tonnes of ETF holdings are now sitting below the $4,000 level, creating a dense zone of technical resistance that any rally must first overcome.
Chart watchers are increasingly bearish. The 50-day moving average has crossed below the 200-day moving average — a classic “death cross” pattern — and the price currently stands 7.78% below the short-term trend line and 10.91% below the long-term one. The relative strength index at 38.4 suggests oversold conditions, but 30-day volatility of nearly 28% points to lingering nervousness. The next major support sits just 3.65% below current levels at $3,901.30, the 52-week trough; a decisive break below that could open the path toward $3,500.
Among the big banks, forecasts remain divided. JPMorgan sees gold recovering to $4,500 by the fourth quarter, while Goldman Sachs recently trimmed its year-end estimate to $4,900. Analysts broadly agree that a durable turnaround hinges on one condition: a de-escalation of the Iran standoff that would relieve pressure on energy prices and, in turn, allow the Fed to ease off its restrictive stance. Until then, the metal looks likely to remain caught between cautious central bank buying and the gravitational pull of higher yields and a stronger dollar.
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