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U.S. Inflation Pressure and High-Interest Rate Outlook Weigh on Gold Prices

Focus on Gold:

Developments in US–Iran peace negotiations and their impact on safe haven sentiment
Persistent US inflation and rising expectations of Fed interest rate hikes
Friday, June 12, 2026 – Gold prices weakened to around US$4,208 per troy ounce, influenced by developments in negotiations between the United States and Iran after U.S. President Donald Trump indicated the possibility of reaching a peace agreement soon, potentially reopening shipping lanes in the Strait of Hormuz. However, the Iranian government emphasized that no final decision has been made regarding the agreement so far. This uncertainty has caused gold movements to be volatile, with reduced geopolitical risks suppressing safe haven asset demand, while the potential failure of negotiations remains a supporting factor for prices.

On the fundamental side, pressure on gold also stems from US producer inflation data, which showed another increase. The US Producer Price Index (PPI) rose 1.1% (month-to-month) and 6.5% (year-over-year) in May, marking the largest annual increase in about three and a half years. Meanwhile, core PPI increased 0.4% (month-to-month) and 4.9% (year-over-year). These data reinforce signals that inflationary pressures remain relatively high, mainly due to rising energy prices triggered by Middle East conflicts. This situation boosts market confidence that the Federal Reserve will maintain tight monetary policy for a longer period.

According to the CME FedWatch Tool, market participants now estimate about a 60% chance of US interest rate hikes by December 2026. These high-interest rate expectations support the strengthening of the US dollar and increase the opportunity cost of holding gold as a non-yielding asset. Going forward, markets will continue to monitor developments in US–Iran negotiations, energy price movements, and Fed officials’ communications for further clues on the US monetary policy direction.

Technically, the nearest support levels for gold prices are around $4,083 to $3,954, while the nearest resistance is at $4,280 to $4,348. If selling pressure increases, deeper support is seen at $3,757, while medium-term resistance is in the $4,545 area.
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