Gold prices continued their decline during Asian trading on Thursday, hovering near their lowest levels in over seven months. A strengthening U.S. dollar and growing expectations of further tightening by the Federal Reserve are dampening demand for the non-yielding metal.
Spot gold fell by 0.7% to $3,970.47 per ounce as of 05:17 Moscow time, while U.S. gold futures dropped 0.5% to $3,990.90.
On Wednesday, gold broke through the key threshold of $4,000 per ounce for the first time since November 2025.
Thus, from its record high of $5,595.46 per ounce in January, the precious metal has lost nearly 30%.
This decline comes as the dollar remains near a 13-month high after six consecutive sessions of gains, supported by increasing bets on a potential interest rate hike by the Fed this year.
According to CME FedWatch data, markets estimate the probability of a rate hike in July at around one-third, with the likelihood of a tightening by September standing at 66%.
A stronger dollar makes gold, which is priced in U.S. currency, more expensive for foreign buyers, while rising interest rates increase the opportunity cost of holding bullion, which generates no income.
“Gold’s weakness clearly shows how much markets have shifted their focus from safe-haven demand to the impact of high interest rates and tighter financial conditions,” ING analysts noted in their recent review.
The latest drop also reflects a broader reassessment of safe-haven demand. Easing geopolitical tensions amid progress in peace talks between the U.S. and Iran, along with lower oil prices, have reduced some of the risk premium that supported gold at the start of the year.
Traders are awaiting the release of U.S. Personal Consumption Expenditures (PCE) data—the Fed’s preferred inflation gauge—for further clues on the future course of monetary policy.
Among other precious metals, silver fell by 1.7% to $56.44 per ounce, following a decline of more than 6% in the previous session.
“Although the silver market is expected to remain in deficit, some of the strongest demand drivers are becoming less significant,” ING analysts added.
Platinum dropped by 1.5% to $1,561.60 per ounce, after falling 4.5% on Wednesday.
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