Gold slides to two-week low as Fed rate hike bets grow

Gold Slides Toward Two-Week Low as Hawkish Fed Fuels Dollar Strength

Gold fell for a second straight session on Wednesday, extending losses that have brought the metal to its lowest levels in nearly two weeks, as the Federal Reserve’s hawkish pivot under Chair Kevin Warsh continued to ripple through commodity markets. Rising expectations for a rate hike later this year have lifted Treasury yields and the U.S. dollar, undercutting the appeal of the non-yielding metal.

Rate Hike Bets Tighten the Vise

The selloff follows last week’s June Fed meeting, where nine of 18 policymakers projected at least one rate increase by year-end, flipping the committee’s implied next move from a cut to a hike. The median dot-plot estimate for the federal funds rate rose to 3.8% from 3.4% in March. Bond futures markets now price in more than an 85% chance of a rate increase this year.morningstar

Bank of America escalated the outlook further, forecasting three quarter-point hikes beginning in September that would lift the benchmark rate to between 4.25% and 4.5%. On Tuesday, CNBC reported that gold futures fell 1.3% to settle at $4,149.40 per ounce, while silver tumbled more than 5%.fortune

Wall Street Recalibrates Gold Forecasts

Major banks have begun trimming year-end gold targets in response to the hawkish shift. Goldman Sachs cut its year-end forecast by $500 to $4,900 per ounce on June 19. Deutsche Bank adjusted its third-quarter target to $4,300, warning that three to four rate hikes could push gold as low as $3,800. Bank of America’s former $6,000 target now “appears improbable,” according to commodity strategist Michael Widmer. JPMorgan also lowered its 2026 average gold price forecast to $5,243 from $5,708, citing softer near-term demand.cnbc

Fading Safe-Haven Demand

Easing geopolitical tensions have compounded the pressure. The U.S.-Iran conflict that began on February 28 concluded with a ceasefire on May 5, and a subsequent Israel-Lebanon ceasefire agreement in early June further reduced the risk premium that had supported gold for months. With the dollar strengthening and safe-haven flows ebbing, technical analysts have noted that gold is approaching support near the upper boundary of the weekly Ichimoku cloud around $3,974 per ounce, bringing the psychologically important $4,000 level into focus.youtube

Not everyone sees a sustained downturn. UBS maintains a long-term target of $5,900 by year-end, calling recent weakness “temporary rather than a structural shift”. But for now, the combination of a hawkish Fed, a resurgent dollar, and calmer geopolitics has put gold bulls firmly on the defensive.thestreet