Gold Falls to Late-2025 Lows

Gold prices extended their decline toward $4,150 per ounce on Wednesday, reaching levels last seen in late November 2025, as US inflation data largely matched expectations and the Iran conflict intensified. Headline inflation rose to 4.2% in May, its highest since April 2023, fueled by soaring energy costs tied to the Iran conflict, while the core rate climbed to a seven-month high of 2.9%. Traders slightly scaled back expectations for Federal Reserve rate hikes this year, though a quarter-point increase in December remains fully priced in after stronger-than-expected US employment data last week. Meanwhile, Middle East tensions escalated as the US and Iran exchanged fresh strikes, with President Donald Trump stating that Iran will "have to pay the price" for delaying negotiations, undermining a fragile ceasefire and dimming prospects for a broader peace agreement.

Gold dropped toward $4,200 an ounce on Wednesday, falling to its lowest level since March 23 after the US launched new strikes against Iran following the downing of an American helicopter, driving oil prices higher and fueling inflation concerns. The latest escalation has cast doubt on the durability of a fragile ceasefire and the prospects for a broader peace agreement, while extending the near-complete closure of the Strait of Hormuz. Rising energy costs linked to the conflict have heightened fears of persistent inflation and the possibility of further central bank tightening, weighing on non-yielding assets such as gold. Meanwhile, investors looked ahead to the release of US inflation figures for fresh clues on the Federal Reserve’s policy path. Stronger-than-expected US employment data also strengthened expectations that the Fed could raise interest rates before the end of the year.

Gold prices dropped to $4,300 per ounce on Tuesday, returning to levels last seen in December 2025, as investors shifted focus to the upcoming US inflation report, due Wednesday, with expectations that the inflation rate climbed to 4.2% in May, its highest level in nearly three years, driven by a surge in energy prices. The anticipated inflation rise follows last week’s stronger-than-expected US jobs report, which showed the economy added 172,000 jobs in May, well above forecasts. This prompted investors to increase bets on Federal Reserve interest rate hikes this year, with traders now pricing in about a 70% chance of a rate hike in December. Elsewhere, developments in the Middle East suggested a possible deal, as Iran and Israel announced they had halted attacks on each other following an appeal from US President Donald Trump. This pushed oil prices lower, offering some relief to inflation fears, though uncertainty remains.