Gold slumps toward $4,000 as tech selloff drags metals lower

Gold Slumps Toward $4,000 as Tech Selloff Reverberates Through Precious Metals

Gold tumbled toward $4,000 an ounce on Tuesday as a sweeping technology selloff that began in U.S. markets rippled across global asset classes, dragging precious metals lower alongside equities. Silver fell sharply in tandem, with futures dropping to around $62 per ounce in morning trading.yahoo

A Broad Market Rout

Bullion fell as much as 2.4% to approximately $4,091, approaching a low set earlier this month, according to Bloomberg, as investors liquidated holdings to cover losses elsewhere in their portfolios. While gold is traditionally viewed as a safe haven, it frequently declines during broad market selloffs as traders raise cash across asset classes.riotimesonline

The precious metals decline came as the Nasdaq Composite dropped 2.2% on Tuesday, extending Monday’s losses. South Korea’s Kospi plunged roughly 10%, driven by semiconductor heavyweights Samsung Electronics and SK Hynix. Chipmakers Nvidia and Micron also fell sharply as investors questioned whether AI valuations could be sustained amid a tightening monetary outlook.investopedia

Rate Repricing Weighs on Gold

Deutsche Bank analyst Michael Hsueh cut the bank’s gold forecast by up to 22%, now projecting $4,300 per ounce in the third quarter and $4,800 in the fourth quarter. “Fed repricing, together with resilient U.S. macro data, has played the primary role in pushing gold lower,” Hsueh wrote. He warned that if markets price in three to four rate hikes, gold could fall to $3,800.yahoo

Separately, Bank of America abandoned its view that the Fed would hold rates steady through 2026, now forecasting three quarter-point hikes in September, October, and December that would lift the federal funds rate to 4.25%–4.5%. The bank said the Fed’s inflation problem has become “unambiguously worse” under new Chair Kevin Warsh. Bank of America expects no rate cuts until at least 2028, according to its Monday report.bitcoin

PCE Data Looms

Markets are now focused on Wednesday’s release of the personal consumption expenditures price index for May — the Fed’s preferred inflation gauge — due June 25. In April, core PCE rose 3.3% year-over-year, well above the Fed’s 2% target, while headline PCE hit 3.8%, its highest since May 2023. Bank of America expects the upcoming report to show core PCE running at an annual rate of 3.5%.cnbc

The hawkish macro backdrop has drained traditional support for gold: ETF selling has continued, futures open interest has fallen to a 17-year low, and China’s gold premium over Comex has flipped to a discount.yahoo