Gold Slides to Low on Inflation, Fed Hike Odds
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Gold fell to a six‑month low of $4,046.20 per ounce on Thursday, its lowest level since November, and was down 6.3% for the week, putting it on track for its worst week since mid‑March.
- Federal Reserve is expected to keep its benchmark rate steady at 3.50%–3.75% next week.
- CME Group’s FedWatch tool shows a 67% probability of a Fed rate hike by December, indicating traders’ belief that higher rates could make Treasury securities more attractive than gold.
- Iran war (now in its fourth month) has pushed energy prices higher, contributing to the fastest U.S. consumer inflation increase in three years in May.
- Citigroup flagged gold’s break below its 200‑day moving average – the first since September 2023 – as a major negative signal, while still maintaining a constructive medium‑to‑long‑term outlook.
- JPMorgan reported about $20 billion of gold ETF outflows in the week to June 5 and noted a continued retreat from the “debasement trade” by retail and institutional investors.
Why it matters: Retail and institutional investors who hold gold see portfolio values erode, while Treasury and dollar‑denominated assets stand to benefit as market pricing of a December Fed hike rises to 67%, reflecting a shift away from the so‑called ‘debasement trade’ toward higher‑yielding safe‑haven alternatives.
