Gold prices declined during Asian trading on Wednesday, extending their recent weakness after the precious metal recorded its worst quarterly performance in 13 years.
Concerns about persistent inflation and the possibility of higher US interest rates continued to weigh on demand for bullion.
Gold Prices Fall Below $4,000
Spot gold dropped 0.7% to $3,978.40 per ounce by 00:49 ET, or 04:49 GMT.
Gold futures fell 1.2% to $3,991.45 per ounce, leaving both contracts below the closely watched $4,000 level.
Spot prices also remained near their lowest point in eight months.
Investors Shift Toward the US Dollar
Gold led losses across the precious metals market as investors increased their exposure to the US dollar.
Expectations that the Federal Reserve could raise interest rates later this year strengthened demand for the currency and reduced the appeal of non-yielding assets.
Higher interest rates usually place pressure on gold because investors can earn returns from bonds and other interest-bearing investments.
Gold Records Worst Quarter Since 2013
Gold prices fell around 14% during the June quarter.
That marked the metal’s weakest quarterly performance since 2013.
Although gold had already struggled following the outbreak of the US-Israel conflict with Iran, most of the recent decline occurred in June.
Rising inflation concerns and a more hawkish Federal Reserve outlook triggered heavy selling across precious metals.
Federal Reserve Rate Expectations Reverse
The Federal Reserve’s June meeting showed that several policymakers supported at least one interest rate increase this year.
This represented a major shift from earlier expectations that the central bank would cut rates during 2026.
Persistent inflation was one of the main reasons behind the change in outlook.
High oil prices linked to the Middle East conflict had increased concerns that price pressures would remain elevated.
AI Chip Demand Adds to Inflation Concerns
Oil prices later declined following progress toward a US-Iran peace agreement.
However, investors remained concerned about other sources of inflation.
Rapid growth in artificial intelligence investment has increased demand for advanced semiconductors, pushing chip prices higher.
These concerns became more visible after Apple raised prices on several devices in June.
Higher Rates Remain a Major Risk for Gold
Financial markets are now pricing in at least one Federal Reserve rate hike this year, according to the CME FedWatch tool.
A higher-rate environment is generally negative for gold.
Because bullion does not pay interest, its opportunity cost rises when returns on bonds and cash increase.
Silver and Platinum Extend Quarterly Losses
Other precious metals also moved lower on Wednesday.
Spot silver fell 1.3% to $57.795 per ounce. The metal lost approximately 22% during the June quarter.
Spot platinum declined 0.4% to $1,548 per ounce after falling around 21% during the same three-month period.
Markets Await Kevin Warsh Speech
Investors are now focused on Federal Reserve Chair Kevin Warsh, who is scheduled to speak later on Wednesday.
Warsh will address the European Central Bank Forum on Central Banking in Portugal.
The appearance will be his first major public speech since his first Federal Reserve policy meeting in mid-June.
Warsh May Offer Limited Guidance
Warsh is not expected to provide detailed forward guidance.
During the June meeting, he supported reducing the amount of public communication from the Federal Reserve.
Even so, investors will closely examine his comments for clues about inflation, economic growth, and future interest rate decisions.
US Payrolls Report Also in Focus
Warsh’s speech comes one day before the release of the June US nonfarm payrolls report.
The employment data could influence expectations for Federal Reserve policy.
A strong labor market may strengthen the case for higher interest rates, while weaker figures could reduce pressure on the central bank to tighten policy.
For now, gold prices remain under pressure as investors assess the outlook for inflation, US interest rates, and the Federal Reserve.
