Gold prices were on track to record their steepest quarterly decline since 2013 on Tuesday.
Persistent inflation concerns, expectations of higher interest rates and a stronger U.S. dollar continued to weigh on the precious metal.
Gold Extends Its Monthly Losing Streak
Spot gold slipped 0.1% to approximately $4,014.71 per ounce in morning trading.
Gold futures also fell 0.3% to around $4,028.77 per ounce.
Spot gold was down more than 11% in June, leaving the metal on course for its fourth consecutive monthly decline.
Traders Question Whether Gold Has Reached a Bottom
The extended sell-off has raised questions about whether gold prices are close to stabilizing.
David Morrison, senior market analyst at Trade Nation, said investors must now decide whether the recent decline has already established a market bottom.
Gold has been under pressure for five months since reaching an all-time high at the end of January.
However, continued concerns about inflation and interest rates could leave the market vulnerable to further losses.
Inflation Concerns Increase Rate Hike Expectations
Higher energy costs and economic disruptions linked to artificial intelligence have increased fears that inflation could remain elevated.
As a result, traders have raised their expectations that the Federal Reserve may increase interest rates again.
Higher rates usually create difficult conditions for gold because the metal does not pay interest or generate income.
Investors may therefore prefer interest-bearing assets such as government bonds when borrowing costs rise.
Middle East Uncertainty Remains a Market Risk
Energy prices have fallen back toward levels seen before the latest conflict following an interim peace agreement between the United States and Iran.
However, uncertainty in the Middle East has not disappeared.
Military tensions flared again over the weekend, highlighting the fragile nature of the agreement.
Technical discussions between U.S. and Iranian officials are expected to take place in Qatar during the week, according to Pakistan, which has served as a mediator.
Stronger U.S. Dollar Pressures Gold Prices
The stronger U.S. dollar has also contributed to the decline in gold prices.
The currency has gained support from growing expectations that the Federal Reserve will raise interest rates at least once this year.
Federal Reserve officials adopted a more hawkish tone during their June meeting.
Several policymakers suggested that another rate increase may be necessary if inflation remains above the central bank’s target.
A stronger dollar often makes gold more expensive for buyers using other currencies, which can weaken international demand.
OCBC Cuts Gold and Silver Forecasts
OCBC analysts lowered their gold and silver price forecasts on Tuesday.
The Singapore-based bank reduced its end-of-2026 gold price target to $4,360 per ounce, down from its previous forecast of $5,100.
OCBC also lowered its silver price forecast to $67 per ounce, compared with its earlier projection of $89.50.
The bank cited high interest rates and challenging macroeconomic conditions as the main reasons for the revisions.
Long-Term Precious Metals Outlook Remains Intact
Despite the lower forecasts, analysts did not completely abandon their positive long-term outlook for precious metals.
Instead, they said the revisions reflected a more difficult near-term environment.
Gold prices may remain under pressure while interest rates stay high and the U.S. dollar remains strong.
However, geopolitical uncertainty, central bank demand and long-term inflation concerns could continue to support gold over a longer period.
