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Gold Prices Drop to Two-Month Low, Markets Worry The Fed Raises Interest Rates

Global gold prices fell more than 2% on Wednesday (6/10/2026) and touched their lowest level in over two months.

Pressure on this precious metal arose after renewed tensions between the United States (US) and Iran sparked concerns of higher inflation and the possibility of US interest rate hikes.

Spot gold prices declined 2.7% to US$4,148.86 per ounce at 11:59 GMT, the lowest since March 23. Meanwhile, US August futures contracts dropped 2.7% to US$4,169.90 per ounce.

Senior FXTM analyst, Lukman Otunuga, said that gold is currently under pressure from rising inflation risks, even though geopolitical tensions usually boost safe-haven asset interest.

According to him, the latest escalation between the US and Iran actually hampers efforts to end the conflict that has been ongoing for several months.

This situation triggered a surge in oil prices and increased market expectations of interest rate hikes.

The latest tensions occurred after Iran’s Revolutionary Guard claimed to have launched missile and drone attacks on US military bases in Jordan, Kuwait, and Bahrain in retaliation for Washington’s strikes against Iranian targets around the Strait of Hormuz.

This tit-for-tat action became one of the largest clashes since both countries agreed to a ceasefire in April.

The US-backed conflict with Iran since late February has driven oil prices sharply higher.

This energy price increase raised concerns of higher inflation and pushed market expectations for monetary policy tightening by the US Federal Reserve.

Although gold has traditionally been seen as an inflation hedge, rising interest rates usually have a negative sentiment because they increase the attractiveness of interest-bearing assets compared to non-yielding gold.

According to CME FedWatch Tool, market participants now estimate about a 70% chance that the Federal Reserve will raise interest rates in December.

Next, investors’ focus is on the release of the US Consumer Price Index (CPI) data for May, which will be announced today, as well as the Producer Price Index (PPI) data on Thursday (6/11).

Both indicators are expected to be important clues for the Fed’s monetary policy direction in the second half of 2026.

Otunuga assesses that the latest inflation data could potentially change market expectations regarding the US central bank’s actions in the coming months.

From a technical perspective, he added that a decline in gold prices below the 200-day moving average is a negative signal that could trigger further selling pressure.

In other precious metals markets, silver prices fell 2.4% to US$63.8 per ounce, platinum weakened 3.9% to US$1,659.18 per ounce, while palladium rose 0.4% to US$1,227.25 per ounce.