Gold slides below $4,160 as Fed’s hawkish pivot lifts dollar

Gold dropped below $4,160 per ounce on Friday, extending its retreat as the Fed’s hawkish dot plot and a one-year high in the U.S. dollar weighed on bullion.tradingeconomics
The Fed held rates at 3.5%-3.75% on Wednesday but shifted its median 2026 projection to 3.8%, flipping from an expected cut to a possible hike, according to CNBC.cnbc
Citi Research cut its near-term gold target to $4,000, while Goldman Sachs maintained a $5,400 year-end forecast set earlier this year.investopedia

Gold Extends Slide as Fed’s Hawkish Pivot and Surging Dollar Crush Bullion

Gold prices fell sharply on Friday, extending a weeks-long selloff as the Federal Reserve’s hawkish turn and a resurgent U.S. dollar continued to undermine demand for the non-yielding metal. Spot gold dropped below $4,160 per ounce, according to Trading Economics, positioning the precious metal for a third consecutive weekly decline after retreating more than 25% from its January record high near $5,589.goldsilver

The latest leg lower followed the Fed’s June 17 decision to hold rates steady at 3.5% to 3.75% while signaling that rate hikes — not cuts — may be next. The updated dot plot showed the median policymaker expects rates to end 2026 at 3.8%, a reversal from the March projection that still implied a reduction. Markets responded by pricing in roughly a 36% chance of a 25 basis-point hike before year-end, according to CME FedWatch data cited by Fox Business.stocktitan

Dollar Hits One-Year High

The hawkish shift turbocharged the U.S. dollar, with the DXY index rising above 100.8 to reach a one-year high. Currency research firm Convera noted that the greenback was further supported by the U.S.-Iran interim peace deal, which boosted risk appetite and drew capital away from safe-haven assets like gold.tradingeconomics

Gold had briefly rallied following reports that Washington and Tehran finalized the ceasefire agreement, but the move proved short-lived as easing geopolitical tensions paradoxically hurt bullion by removing a key support pillar.hdfcsky

Forecasts and Outlook Under Pressure

The downturn has forced Wall Street to reassess its once-exuberant gold forecasts. Goldman Sachs had raised its year-end 2026 target to $5,400 per ounce earlier this year, while Citi Research in early June cut its near-term target by $300 to $4,000, noting gold had broken below its 200-day moving average for the first time since late 2023.facebook

In India, domestic gold prices plunged by more than Rs 5,000 per 10 grams on Friday as the global rout rippled through local markets. In Dubai, 24-karat gold was last quoted at Dh519.75 per gram, down from peaks above Dh547 in May.uaegoldprice

Analysts say gold’s path forward hinges on whether the Fed follows through on its tightening bias. “Higher borrowing costs tend to reduce the appeal of non-yielding assets such as gold by increasing their opportunity cost,” Trading Economics noted, summarizing the market’s central concern.goodreturns