Gold slips as BofA forecasts three Fed rate hikes this year

Gold futures fell on Monday as Bank of America ↗2.08% projected three rate hikes in 2026 and no cuts until 2028, strengthening the dollar.yahoo
Goldman Sachs ↗0.89% cut its year-end gold target by $500 to $4,900 per ounce, citing the Fed’s hawkish shift, according to Bloomberg.bloomberg
US-Iran talks in Switzerland ended with a “roadmap” toward a final deal within 60 days, easing geopolitical risk that typically supports gold, per Al Jazeera.aljazeera

Gold Mixed as Strong Dollar Offsets US-Iran Peace Progress

Gold prices traded in a narrow range on Monday, as a strengthening dollar fueled by the Federal Reserve’s hawkish posture counteracted improved risk sentiment from a breakthrough in US-Iran peace talks in Switzerland.

Spot gold was trading near $4,191 per ounce on Monday morning, according to Fortune, while gold futures declined, with the front-month contract falling to around $4,180, down more than $44 on the session, according to Wall Street Journal data.wsj

A Hawkish Fed Weighs on Bullion

The mixed performance comes as markets digest the Fed’s increasingly restrictive outlook. The central bank held rates steady at its June meeting but raised its inflation forecast for the end of 2026 to 3.6% and projected at least one rate hike later this year, according to Reuters.reuters

Bank of America deepened the hawkish shift on Monday, with analyst Aditya Bhave writing that the firm now expects three 25-basis-point rate increases in September, October, and December, bringing the policy rate to 4.25%–4.50%, and no rate cuts until 2028. The outlook sent the U.S. Dollar Index higher, with the DXY rising to 101.00 on Monday.yahoo

Goldman Sachs responded to the rate environment by cutting its year-end gold forecast by $500 to $4,900 per ounce, down from a prior target of $5,400, analysts Lina Thomas and Daan Struyven wrote in a note last week. The bank said it still expects gold to gain ground in the second half but less than previously anticipated.goldrepublic

US-Iran Talks Provide Partial Offset

Limiting gold’s downside, risk appetite improved after mediators from Pakistan and Qatar said the first round of US-Iran talks at Burgenstock, Switzerland, ended Monday with both sides agreeing on a “roadmap towards finalizing an agreement within 60 days”. The delegations, led by Vice President JD Vance and Iranian Parliament Speaker Mohammad Bagher Ghalibaf, also established a communication channel for the Strait of Hormuz and agreed to a deconfliction cell to prevent renewed conflict in Lebanon.cnn

The progress builds on an initial deal announced June 15 that extended a ceasefire and outlined a framework for reopening the Strait of Hormuz. Technical discussions are set to continue this week at the Swiss venue.aljazeera

The easing of geopolitical tensions has historically reduced safe-haven demand for gold, and the combination of a stronger dollar and receding Middle East risk left the metal caught between opposing forces on Monday.