Gold prices remained under pressure on Tuesday and were heading for their largest quarterly decline in more than a decade, as persistent inflation concerns and expectations of further interest rate increases continued to reduce demand for the precious metal.
Spot gold edged up 0.1% to US$4,197.54 an ounce at 05:48 ET (09:48 GMT), while gold futures slipped 0.2% to US$4,033.05 an ounce. Spot prices have fallen more than 11% during June, putting bullion on course for a fourth consecutive monthly decline.
Analysts question whether the sell-off has ended
“The question for traders to ask now is whether the low is in for gold, given the five-month selloff from the all-time highs hit at the end of January, or has gold got further to fall?” said David Morrison, Senior Market Analyst at Trade Nation, in a note.
Inflation and rate outlook continue to pressure bullion
A combination of elevated energy costs and disruption linked to artificial intelligence investment has fuelled expectations that inflation will remain persistent, increasing the likelihood that the U.S. Federal Reserve will raise interest rates again this year.
Higher borrowing costs typically weigh on non-yielding assets such as gold.
Although oil prices have retreated to levels seen before the recent conflict following the interim peace agreement between the United States and Iran, uncertainty in the Middle East remains. Tensions flared again over the weekend, while Pakistan said technical discussions between U.S. and Iranian representatives are expected to take place in Qatar later this week.
Stronger dollar adds further headwinds
Gold has also been pressured by a firmer U.S. dollar as investors increasingly expect the Federal Reserve to deliver at least one additional rate increase this year.
The central bank adopted a hawkish tone at its June policy meeting, with several officials signalling that further monetary tightening may still be required.
OCBC lowers precious metals forecasts
Analysts at OCBC revised down their outlook for both gold and silver prices on Tuesday, citing the impact of higher interest rates and a more challenging macroeconomic backdrop.
The Singapore-based bank cut its year-end 2026 forecast for gold to US$4,360 per ounce from US$5,100, while reducing its silver forecast to US$67 per ounce from US$89.50.
Despite the lower forecasts, analysts said the changes reflected a more difficult near-term economic environment rather than a fundamental shift in the long-term investment case for precious metals.