Gold prices are on track for a fourth consecutive weekly decline, with the precious metal trading at $2,281 per ounce as a resurgent US dollar and rising Federal Reserve rate hike expectations continue to weigh on the non-yielding asset. The sustained sell-off has erased more than $180 from gold's value since the late-May peak near $2,462.
The dollar index (DXY) has climbed to 101.32, its highest level in three weeks, driven by hawkish repricing of Fed policy following the May core PCE reading of 3.4% year-over-year — the hottest inflation print since October 2023. The stronger dollar makes gold more expensive for holders of other currencies, dampening international demand.
Rate Expectations Reshuffle
Market-implied probabilities for a Fed rate hike have surged over the past week. The Overnight Index Swap (OIS) curve now prices in a 42% chance of a 25-basis-point increase by September, up from 18% just four weeks ago. Higher interest rates increase the opportunity cost of holding gold, which offers no yield, and have historically correlated with periods of gold price weakness.
Real yields, a key competing factor for gold, have risen sharply. The yield on 10-year Treasury Inflation-Protected Securities (TIPS) has climbed to 1.92%, up from 1.65% at the start of the month, reducing the relative appeal of bullion.
Technical Levels Under Pressure
XAU/USD has broken below several critical technical levels during the four-week slide. The 50-day simple moving average at $2,335 gave way two weeks ago, and the 100-day SMA at $2,298 is now being tested. A decisive close below this level would open the path toward the 200-day SMA at $2,240, which represents the last major technical support before the $2,200 psychological level.
The RSI on the daily chart reads 34, approaching oversold territory. While this could signal a near-term bounce is possible, the RSI has remained below 50 since June 3, reflecting persistent downside momentum. The MACD histogram continues to deepen below the zero line, with no signs of bullish divergence emerging.
Contrast With Oil
The precious metal's decline stands in contrast to movements in other commodity markets. Crude oil has also been falling, with WTI sliding to $74.50 on easing Middle East supply risks, but the drivers are distinct. While both assets face headwinds from a stronger dollar, gold's additional burden comes from the direct competition with yield-bearing instruments in a rising rate environment.
Physical gold demand from central banks, which provided a significant floor for prices throughout 2024 and early 2025, has shown signs of moderation. Data from the World Gold Council indicates net central bank purchases in May totaled 38 tonnes, down from the monthly average of 52 tonnes in the first quarter.
What Could Reverse the Slide
Analysts identify several potential catalysts that could stem gold's decline:
- Fed pivot signals: Any dovish commentary from FOMC members suggesting the hiking cycle has peaked would provide immediate relief.
- Geopolitical escalation: Renewed geopolitical tensions could revive safe-haven demand for gold.
- Dollar weakening: A reversal in dollar strength, possibly triggered by softer US economic data, would remove a key headwind.
- Physical buying: Increased retail and central bank purchases at lower price levels could establish a floor.
ETF flows, meanwhile, tell a mixed story. Global gold ETF holdings edged up by 1.2 tonnes last week, according to the World Gold Council, suggesting some dip-buying interest. However, the pace of accumulation remains well below levels seen earlier in the year. COMEX futures positioning data shows that speculative net longs have fallen to their lowest since February, indicating that momentum traders are largely sitting on the sidelines.
For the immediate term, gold's trajectory remains heavily tied to the dollar and rate expectations. With the next FOMC meeting still weeks away and key US economic data — including non-farm payrolls and CPI — due in the interim, volatility is likely to remain elevated. Traders should watch the $2,280-$2,300 zone closely; a breakdown below this band could accelerate selling toward $2,200, while a reversal from these levels could signal the beginning of a recovery.