Gold prices dropped to their lowest levels of the year on Tuesday and were heading toward a fourth consecutive monthly decline.
Persistent inflation concerns and expectations of higher U.S. interest rates continued to weigh heavily on the precious metal.
Spot gold fell 0.7% to $3,987.59 per ounce by 02:09 ET, or 06:09 GMT. Gold futures declined 1% to $3,999.82 per ounce.
Spot prices were trading at their weakest level since early November.
Gold Heads for Worst Monthly Loss Since 2008
Gold was down approximately 12.8% in June.
That placed the precious metal on course for its largest monthly decline since 2008.
The sharp fall reflected growing investor concerns that interest rates could remain elevated or rise further.
Federal Reserve Rate Expectations Pressure Gold
A stronger U.S. dollar added to the pressure on bullion.
Investors have become increasingly convinced that the Federal Reserve could raise interest rates at least once this year.
Those expectations strengthened after the central bank delivered a more hawkish message at its June meeting.
Several policymakers reportedly supported the possibility of another rate increase.
Silver and Platinum Record Heavy Losses
Other precious metals also declined on Tuesday and were heading for steep monthly losses.
Spot silver fell 1.4% to $57.499 per ounce. The metal was down around 24.2% in June.
Spot platinum dropped 1% to $1,567.72 per ounce and had lost nearly 19% during the month.
Inflation Concerns Support Higher-Rate Outlook
High energy costs and disruption linked to the artificial intelligence boom have increased fears that inflation could remain persistent.
These concerns have encouraged investors to expect tighter Federal Reserve policy.
Although energy prices declined following a preliminary U.S.-Iran peace agreement, uncertainty surrounding the Middle East remained elevated.
A fresh military escalation over the weekend added to market caution.
AI Chip Demand Raises Price Pressures
Concerns about AI-related inflation increased after Apple raised the prices of several devices because of higher semiconductor costs.
Other electronics manufacturers have introduced similar price increases.
Rapid expansion in the artificial intelligence industry has placed additional pressure on global chip supplies, pushing production costs higher.
Higher Interest Rates Reduce Gold’s Appeal
Expectations of persistent inflation have strengthened the case for higher U.S. interest rates.
This environment is generally negative for gold and other non-yielding assets.
Gold does not provide interest income. Therefore, rising rates make interest-bearing investments such as government bonds more attractive by comparison.
OCBC Cuts Gold and Silver Forecasts
OCBC analysts reduced their gold and silver price forecasts on Tuesday.
The Singapore-based bank cited high interest rates and challenging global economic conditions.
OCBC lowered its end-2026 gold forecast to $4,360 per ounce from $5,100.
It also reduced its silver outlook to $67 per ounce from a previous estimate of $89.50.
Long-Term Gold Outlook Remains Supported
OCBC said the revised forecasts reflected a more difficult short-term economic environment rather than a complete change in its long-term view on precious metals.
Central bank purchases and concerns about government finances could continue to support gold over time.
However, expectations of higher U.S. interest rates have significantly weakened the near-term outlook.
These conditions have also reduced investor demand for gold exchange-traded funds.
