COMEX gold was trading at $4,002.80 per ounce, down $44.80 or 1.11%, after touching an intraday low of $4,001.20 an ounce. COMEX Silver witnessed sharper selling, falling 4.44% to $55.77 per ounce, compared with the previous close of $58.025 an ounce.
The decline marks another weak session for precious metals, with gold heading toward its fourth consecutive weekly loss. Investors shifted focus toward the Federal Reserve’s policy outlook after recent US inflation data showed persistent price pressures.
Data released on Thursday (June 25) indicated that US inflation climbed above 4% in May for the first time in three years, largely due to rising energy prices linked to tensions in the West Asia. The stronger inflation reading reinforced expectations that the Fed could continue tightening monetary policy.
Federal Reserve officials also maintained a cautious tone. Chicago Fed President Austan Goolsbee said inflation pressures remain elevated despite some improvement in services inflation, while New York Fed President John Williams stated that inflation is still well above the central bank’s 2% target.
According to CME FedWatch data, traders are now pricing in three rate hikes this year, with expectations for a September hike rising sharply over the past week. Higher interest rates generally reduce the appeal of non-yielding assets such as gold and silver.
At the same time, the US dollar index moved toward a second consecutive weekly gain, making bullion more expensive for holders of other currencies and adding further pressure to prices.
Geopolitical developments also remained in focus. Fresh concerns emerged after the UN International Maritime Organisation paused ship escort operations through the Strait of Hormuz following reports of an attack on a vessel. The incident renewed uncertainty surrounding the fragile US-Iran peace arrangement.
Market participants are also closely watching upcoming US PCE inflation data, which could provide additional direction for interest rate expectations and precious metals.
Meanwhile, China’s net gold imports through Hong Kong fell nearly 38% in May, indicating softer physical demand from one of the world’s largest bullion consumers.
Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions, said bullion markets are facing pressure from multiple global factors simultaneously, including a hawkish Federal Reserve stance, unwinding yen carry trades, and weakness across risk assets.
He noted that gold has technically broken below the important $4,000 an ounce support level, opening the possibility of further downside toward $3,600 an ounce in the near term. Silver, after slipping below the key $60 an ounce mark, could test lower support near $50 an ounce. However, oversold conditions may trigger short-covering rallies in the short term.
-With Reuters inputs
