Gold Falls to Eight-Month Low, Posts Sharp June Loss as Rate Hike Fears Intensify
Gold prices dropped to their lowest level in eight months on Tuesday, heading for a fourth consecutive monthly decline as persistent inflation concerns and expectations of higher U.S. interest rates continued to weigh on the precious metal.
Spot gold fell 1.3% to $3,965.51 per ounce as of 08:47 WIB, while gold futures declined 1.5% to $3,975.92 per ounce. Spot prices reached their weakest level since early November.
For June, spot gold has plunged 12.8%, marking its worst monthly performance since 2008.
The decline was driven by a stronger U.S. dollar and growing confidence that the Federal Reserve will raise interest rates at least once more this year. Market expectations strengthened after the central bank adopted a more hawkish tone during its June policy meeting, with several policymakers signaling support for additional rate hikes.
Rising energy prices, combined with supply disruptions linked to the rapid expansion of artificial intelligence (AI), have fueled concerns that inflation could remain stubbornly high throughout the year. As a result, investors increasingly expect the Fed to maintain tighter monetary policy.
Although energy prices eased in recent weeks following the U.S.-Iran peace agreement, uncertainty surrounding the Middle East remains elevated after renewed military tensions over the weekend.
Inflation concerns related to AI intensified after Apple Inc. increased prices on several of its devices last week due to higher semiconductor costs. The move followed similar price increases by other electronics manufacturers as the booming AI industry continues to absorb a significant share of the global chip supply.
Persistent inflation expectations have reinforced forecasts for higher interest rates, putting additional pressure on gold and other non-yielding assets. Higher borrowing costs increase the opportunity cost of holding bullion, making it less attractive compared to interest-bearing investments.
Silver and Platinum Also Post Heavy Monthly Losses
Other precious metals also extended their declines on Tuesday, ending June with substantial losses.
Spot silver fell 2.0% to $57.1090 per ounce, bringing its monthly decline to 24.2%. Meanwhile, spot platinum slipped 1.3% to $1,563.25 per ounce, finishing the month down nearly 19%.