Key Highlights

• Worst Quarterly Loss Since 2013: Gold is down roughly 14% for the quarter, its first quarterly loss since 2024 and steepest decline since Q2 2013.

• Fed Rate Hike Expectations Rising: Traders are pricing in a near 65% chance of a September rate hike, eliminating prior expectations of 2026 Fed rate cuts.

• Iran Diplomacy Remains Uncertain: Iran has dismissed reports of renewed Doha talks as unfounded, keeping geopolitical uncertainty embedded in gold pricing.

Gold held at $4,020 an ounce on Tuesday, near its weakest level since November 2025, as a firm dollar and expectations of US interest rate hikes kept pressure on the metal. Bullion was down 11% for the month, heading for a fourth consecutive monthly decline, and down around 14% this quarter, the first quarterly loss since 2024 and the steepest drop since Q2 2013.

Rising energy prices, driven by the Middle East conflict, have erased expectations of Federal Reserve rate cuts this year, with traders now pricing in a near 65% chance of a September hike. Although gold is traditionally seen as an inflation hedge, higher interest rates tend to weigh on the non-yielding asset, reducing its relative appeal compared to yield-bearing alternatives.

Attention now shifts to upcoming US employment data, including nonfarm payrolls, and remarks by Fed Chair Kevin Warsh due Wednesday for clues on monetary policy direction. Markets are looking for confirmation of the labor market's resilience as a key input into the Fed's rate decision timeline.

Meanwhile, investors continued to monitor the prospects for renewed US-Iran diplomacy, though Iran dismissed reports of talks in Doha this week as unfounded. This diplomatic uncertainty adds a layer of geopolitical risk that could still influence gold's safe-haven appeal depending on how the situation develops.

The combination of dollar strength, rate-hike repricing, and easing geopolitical tail risk has created a uniquely challenging environment for gold, which typically benefits from exactly the opposite conditions during periods of economic stress.

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