The gold market is experiencing a sustained sell-off, with prices testing the $4,000 per ounce level after more than two weeks of declines. A stronger U.S. dollar and expectations of a possible Federal Reserve rate hike later this year are the main drivers behind the slump, overshadowing geopolitical uncertainties that usually support safe-haven assets.
Gold futures on the COMEX in New York closed at $4,500 per ounce on May 30, but by the beginning of this week they had fallen to $4,209. On Wednesday, June 24, after the opening of Far Eastern and European exchanges, the price dropped to a range of $4,067.20 to $4,012.09. Around 1:00 p.m. it was at $4,077.30, and briefly dipped below $4,000 at about 2:15 p.m. The historic record of over $5,500 per ounce was set in January 2026.
According to an analysis by ING economists, a stronger dollar and market expectations that the Fed may keep interest rates higher for longer have outweighed support from demand for safe assets driven by ongoing geopolitical risks. These risks include the lack of a clear peace agreement between the U.S. and Iran and the only partial unblocking of navigation in the Strait of Hormuz. Some analysts also point to the possibility that Donald Trump might initiate another armed conflict to divert voters’ attention ahead of the autumn congressional and House of Representatives elections.
Fed policy and dollar strength hammer gold
The change of leadership at the Federal Reserve has had an unexpected effect. New Fed Chairman Kevin Warsh, through his hawkish statements in recent days, has significantly strengthened the U.S. currency. Markets now price in about a 70 percent probability of a rate hike at the September Fed meeting. A strong dollar automatically makes gold more expensive for holders of other currencies, putting natural downward pressure on prices.
– The change of Fed chairman was initially seen as a risk for the dollar, but instead became a catalyst for its appreciation – said Przemysław Kwiecień, chief economist at XTB brokerage. On January 29, the euro-dollar exchange rate was 1:1.20, but by June 24 it had fallen to 1:1.13, meaning the dollar gained 5.83 percent in five months.
Polish zloty also under pressure
The impact on the Polish currency is even more pronounced. On Wednesday, one dollar cost 3.78 PLN, compared to 3.49 PLN on January 27 – a depreciation of the zloty by 7.36 percent. A weaker zloty increases the cost of importing energy raw materials, which contributes to persistently high inflation in Poland. Volatility in precious metals, oil, and natural gas markets, combined with major geopolitical upheavals, is expected to persist throughout the summer.
Źródło: WNP.PL, Fot. Stevebidmead / Pixabay
