Gold prices dipped below $4,350 per ounce on Tuesday as traders boosted bets the Federal Reserve will raise interest rates later this year after a stronger-than-expected US jobs report reduced hopes for near-term rate cuts.
Spot gold fell 0.4% to $4,313.11 an ounce as of 0302 GMT, extending losses from Friday when the metal dropped roughly 3% to its lowest since March 24. August gold futures (GC=F) declined 0.7% to $4,336.30.
Market Snapshot
The precious metal traded near $4,325 during early Asian session, remaining on defensive near its lowest level since March 24 amid Middle East uncertainty and rising US interest-rate-hike expectations.
Gold has fallen 8.64% over the past month but is still up 30.09% year-to-date, according to trading data. The 10-year Treasury yield rallied to a two-week high, increasing the opportunity cost of holding non-yielding bullion.
Event Details
Friday’s US employment report showed the economy added 172,000 jobs in May while unemployment held steady at 4.3%, data that dampened expectations for Fed rate cuts.
Traders are now pricing a 43% probability of a quarter-point rate hike in December, up from about 14% a month ago per the CME FedWatch tool. Another source indicates markets see more than a 50% chance of a December hike, with one estimate at 72%.
Background Context
Gold serves as a safe-haven asset during geopolitical turbulence, yet it does not yield interest, making it less attractive when rates rise. Middle East tensions remain a counterweight. Iran halted strikes against Israel but warned it could resume hostilities if Israel continues attacking Lebanon.
TD Securities cut its H2 2026 gold forecasts, expecting average prices of $4,550 in Q3 and $4,700 in Q4, down 3% and 10% respectively from prior projections. The bank cautioned gold could test $4,000 if oil stays above $100 per barrel.
Outlook
Traders will watch US Consumer Price Index data on Wednesday and Producer Price Index data on Thursday for further clues on the Fed’s rate path.
Three factors to monitor next:
- CPI and PPI inflation data signal whether the Fed will hike or hold rates
- Middle East developments, particularly Iran-Israel tensions and oil price movements
- Whether gold can reclaim $4,350 to stabilise, or if downside opens toward $4,200 and $4,000 support levels
