Global spot gold prices closed the 30/6 trading session down 9 USD, reaching 4,006 USD per ounce. Overall, the precious metal recorded an over 11% loss in June, its sharpest decline since 2013. This also marks the first quarterly price drop since 2024.

The market's downturn is primarily attributed to concerns over accelerating inflation, fueled by the Middle East conflict. Rising inflation strengthens expectations that the US Federal Reserve (Fed) will raise interest rates.

Global gold price movements over the past six months. Chart: Goldprice

While gold typically serves as an inflation hedge, high interest rates tend to depress its price because gold yields no interest. Edward Meir, an analyst at Marex, observed, "The market remains uneasy about the memorandum of understanding between the US and Iran. Gold is under pressure as people don't see light at the end of the tunnel."

Qatari officials announced that US counterparts would not hold a high-level meeting with Iran in Doha, despite their arrival. This development raised doubts about the conflict resolution process.

"Furthermore, US inflation remains significantly above the Fed's 2% target. Consequently, markets anticipate the Fed will maintain interest rates for an extended period, potentially even increasing them," Meir predicted.

Investors currently assign a 67% probability to a Fed rate hike in September, according to the CME FedWatch Tool. The US will release its jobs report this week, offering the market additional data to forecast the Fed's monetary policy stance.

Despite these factors, central bank demand continues to support gold prices. A survey published on 30/6 by the Official Monetary and Financial Institutions Forum (OMFIF) suggests central banks may decrease USD reserves over the next decade due to geopolitical instability concerns, concurrently increasing their gold holdings.

Beyond gold, other precious metals such as silver, platinum, and palladium also experienced price declines in Q2. Silver currently trades at 58 USD per ounce, following its worst quarter in six years.

Ha Thu (according to Reuters)