Gold prices continued to decline on Tuesday, extending a sharp downward trend that has lasted for four consecutive months. The precious metal fell by 1.5% after Asian markets opened, pushing the price of one ounce of gold to nearly $3,956.
The latest decline follows growing expectations that the U.S. Federal Reserve will keep interest rates higher for longer. Investors believe persistent inflation could force the central bank to maintain tight monetary policy. As a result, many traders shifted their attention away from gold and toward interest-bearing assets.
During June, gold lost 12.7% of its value. That marks the biggest monthly decline since October 2008, when global financial markets experienced severe volatility during the financial crisis. The current drop also represents gold’s first quarterly loss since 2024.
The second quarter of this year recorded the steepest quarterly decline in gold prices since 2013. Analysts say several economic factors continue to pressure the precious metal. Higher interest rates increase the appeal of fixed-income investments, while a stronger U.S. dollar makes gold more expensive for buyers using other currencies.
Edward Meir, an analyst at Marex, said rising inflation expectations, a stronger dollar, and forecasts of higher interest rates remain the main reasons behind the recent decline. He explained that these factors have outweighed the traditional safe-haven demand that usually supports gold prices during periods of uncertainty.
Gold typically performs better when interest rates remain low because it does not generate interest or dividend income. When central banks raise borrowing costs, investors often move their money into assets that offer higher returns.
Market expectations for a U.S. interest rate increase in September have also strengthened. Recent surveys show the probability has risen to 64%, reflecting growing confidence that the Federal Reserve will continue its efforts to control inflation.
Investors are now waiting for key U.S. labor market data scheduled for release later this week. Those figures could influence the Federal Reserve’s next policy decisions and determine the short-term direction of gold prices. Traders will closely monitor the employment reports because stronger-than-expected data could support another rate hike, while weaker numbers may ease pressure on the gold market.
