Gold prices have plunged sharply, testing the $4,000 per ounce level on Wednesday, as a stronger U.S. dollar and growing expectations of a Federal Reserve rate hike continue to erode demand for the safe-haven metal. The current sell-off has pushed the precious metal far from its all-time high of over $5,500 per ounce reached in January 2026.
After closing at $4,500 per ounce on the New York COMEX on May 30, gold has been in a steady decline. At the start of the current week, the metal was trading around $4,209 per ounce. By Wednesday, June 24, prices fell to a range of $4,067 to $4,012, briefly dipping below the psychologically important $4,000 mark in the afternoon.
The dollar factor and fed policy
The primary driver behind the sell-off is the sharp appreciation of the U.S. dollar. The euro has weakened from 1.20 to 1.13 against the dollar since late January, a 5.83 percent drop. The Polish złoty has fared even worse, weakening by 7.36 percent to 3.78 per dollar over the same period. A stronger dollar makes gold more expensive for holders of other currencies, naturally depressing prices.
– Markets are now pricing in about a 70 percent probability that the Fed will raise rates at its September meeting – said Przemysław Kwiecień, chief economist at XTB. He noted that the change in Fed leadership, with Kevin Warsh taking over as chairman, was initially seen as a risk for the dollar but has instead become a catalyst for its rally. Warsh’s recent hawkish comments have reinforced expectations of tighter monetary policy.
Geopolitical uncertainty fails to support gold
Despite ongoing geopolitical risks, including the inconclusive status of U.S.-Iran peace negotiations and the partial reopening of shipping lanes in the Strait of Hormuz, investors have not turned to gold as a safe haven. – A stronger dollar and expectations that the Fed may keep rates higher for longer have outweighed support from safe-haven demand stemming from persistent geopolitical risks – analysts at ING bank noted in their latest report.
Some market commentators have also warned that President Donald Trump could seek to divert attention ahead of the midterm elections by triggering another armed conflict, but so far this has not translated into gold buying.
Looking ahead, analysts expect heightened volatility across precious metals, oil, and natural gas markets throughout the summer, driven by the combination of currency fluctuations, Fed policy uncertainty, and geopolitical developments.
Źródło: WNP.PL, Fot. Stevebidmead / Pixabay
