Key Takeaways

• Fourth consecutive loss: Spot gold fell 1.9% to $4,180.85 per ounce — its lowest since March 23; gold futures also dropped 1.9% to $4,204.75.
• Iran shoots down U.S. helicopter: Washington launched fresh strikes on Iranian targets after the downing near the Strait of Hormuz reignited supply disruption fears.
• Oil rises 1%: Crude’s advance adds to concerns that fuel costs are feeding through to broader inflation.
• 70%+ December Fed hike probability: Rate hike expectations are crushing gold’s appeal as a non-yielding asset.
• Treasury yields near multi-month highs: The elevated yield environment continues to increase the opportunity cost of holding bullion.
• Dollar firms: The DXY edged 0.1% higher in Asian hours, hovering near a two-month peak.
• CPI the day’s critical test: Economists expect annual inflation to accelerate to 4.2% in May — its highest since April 2023.
• Fed meeting June 16-17: Rates widely expected to hold, but a hawkish signal looms if inflation surprises.
• Silver drops 1%: To $64.70 per ounce.
• Platinum plunges 3%: To $1,678.60 per ounce.

Gold prices fell for a fourth consecutive session on Wednesday, pressured by a stronger U.S. dollar and rising expectations of a Federal Reserve rate hike, as fresh U.S. strikes on Iran kept energy-driven inflation concerns in focus.

Spot gold slipped 1.9% to $4,180.85 per ounce by 22:06 ET (02:06 GMT) — reaching its lowest level since March 23.

U.S. gold futures also dropped 1.9% to $4,204.75, as investors reduced exposure ahead of key U.S. consumer price index (CPI) data due later on Wednesday.

Fresh Strikes Reignite Energy Inflation Fears

Washington launched new strikes on Iranian targets on Tuesday following the downing of a U.S. military helicopter near the Strait of Hormuz, reigniting fears of broader disruptions to global energy supplies.

Oil prices rose around 1% on Wednesday, adding to concerns that higher fuel costs could feed into inflation and complicate the Federal Reserve’s policy outlook.

The prospect of persistent inflation has prompted investors to scale back expectations for U.S. rate cuts.

More than 70% of market participants are now pricing in a Fed rate hike by December.

Higher interest rates tend to weigh on non-yielding bullion by increasing the opportunity cost of holding the precious metal.

Treasury yields remained near multi-month highs, while the dollar stayed firm ahead of the inflation report.

The DXY edged 0.1% higher during Asian hours, remaining near a two-month peak hit earlier this week.

CPI and Fed Meeting in the Spotlight

Investors are closely watching the CPI data for signs of whether inflationary pressures are accelerating. Economists expect annual consumer inflation to rise to around 4.2% in May — which would mark the highest reading since April 2023 and could reinforce expectations that the Fed will maintain a restrictive policy stance.

Markets are also looking ahead to the Federal Reserve’s June 16-17 policy meeting, where policymakers are widely expected to leave rates unchanged but could signal a more hawkish outlook if inflation remains elevated.

Among other precious metals, silver prices fell 1% to $64.70 per ounce, while platinum dropped 3% to $1,678.60 per ounce.