Key Takeaways Gold faces a nearly 3% weekly decline and approximately 11% monthly loss The dollar reaches near 13-month peaks, pressuring gold demand from foreign buyers May PCE inflation reg
Gold trading showed modest stabilization on Friday following three consecutive weeks of declines. Spot gold climbed 0.3% to reach $4,036.88 per ounce, while U.S. Gold Futures gained 0.1% to settle at $4,051.30. However, this minor recovery doesn’t mask the broader trend, with the precious metal poised for approximately 3% in weekly losses.
Gold Aug 26 (GC=F)The yellow metal has shed approximately 11% throughout the current month. This substantial downturn correlates directly with the strengthening U.S. dollar and increasing market expectations surrounding additional Federal Reserve interest rate increases.
The U.S. dollar maintained levels close to a 13-month peak on Friday, positioning itself for a second consecutive weekly advance. An appreciating dollar elevates gold costs for international purchasers holding different currencies, typically dampening overall demand.
As interest rates climb, gold loses appeal among investors since it generates no income or dividends. With rates potentially moving upward, capital has been flowing toward alternative investments.
Thursday’s release of personal consumption expenditures figures intensified selling pressure on gold. The PCE price index climbed 4.1% in May compared to the previous year. This represents the most elevated reading in over three years and marks the first instance exceeding 4% since 2023.
First, PCE inflation is now officially up to 4.1%, the highest since April 2023.
Inflation is more than double the Fed's 2.0% target, and PCE is the Fed's preferred metric.
But, this news did NOT drive markets lower today.
In fact, futures were higher after the data. pic.twitter.com/IjnyJn5GZP
— The Kobeissi Letter (@KobeissiLetter) June 25, 2026
The PCE index serves as the Federal Reserve’s favored inflation gauge. Such an elevated figure provides policymakers with additional justification to maintain restrictive monetary policy.
According to CME FedWatch tool data, markets currently price in a 63% likelihood of a Fed rate increase by September. This expectation has emerged as a primary catalyst behind gold’s recent deterioration.
Saxo Bank analysts observed that gold is approaching its fourth consecutive weekly decline. They indicated that investor confidence remains fragile following the recent selloff as markets recalibrate expectations around a hawkish Federal Reserve and robust dollar conditions.
Nevertheless, Saxo Bank also highlighted that declining energy costs and softer bond yields might eventually alleviate pressure on the Fed to maintain its tightening stance. Such developments could provide some underlying support for gold in future sessions.
Reports of an attack on a commercial vessel near the Strait of Hormuz temporarily boosted gold. The incident rekindled safe-haven buying interest, as regional tensions persist despite a preliminary peace framework between the U.S. and Iran.
The rally from geopolitical developments proved fleeting. Dollar momentum and rate increase expectations continued to overshadow security concerns.
Other precious metals experienced similar pressure. Silver inched up 0.1% to $57.96 per ounce but remained on course for a 12% weekly decline. Platinum advanced 1% to $1,618.23 per ounce, although it stays positioned for its seventh straight weekly loss.
Copper prices also weakened. London Metal Exchange Copper Futures decreased 0.4% to $13,249.33 per ton. U.S. Copper Futures declined 0.2% to $6.06 per pound.
Gold was last quoted near $4,053 per ounce during early Friday trading sessions, maintaining a nearly 5% weekly decline.
The post Gold Plunges 11% in Monthly Slide as Dollar Surges and Fed Rate Hike Odds Climb appeared first on Blockonomi.
