Historic drop in gold: Lowest level in 7 months reached

The sharp decline in the gold market in recent days is drawing attention. On Thursday, the spot price of gold continued its downward trend, remaining near the lowest level it reached the previous day in over seven months. The primary reasons behind this are the strengthening of the US dollar and the high probability investors assign to interest rate hikes by the US Federal Reserve (Fed).

Spot gold fell 0.4% to $3,985.89 per ounce. The previous day, the price had reached its lowest level since November 2025. US gold futures for August delivery also traded 0.2% lower at $4,001.60.

US DOLLAR HITS RECORD

Expectations that the Fed will raise interest rates have increased the value of the dollar against other currencies. The US dollar, which rose for the third consecutive trading day on Wednesday, climbed to a 13-month high. This rise makes gold more expensive and therefore less attractive for investors purchasing with currencies other than the dollar.

Bullion also slipped just below the critical $4,000/ounce mark for the first time since November 2025 due to the strong dollar and speculation about interest rate hikes. Data from the CME FedWatch Tool shows that the market is operating with expectations of three interest rate hikes within the year, with the probability of a rate hike in September priced at 67%.

On the other hand, US Treasury Secretary Scott Bessent stated, "I welcome Fed Chair Kevin Warsh's plan to reduce forward guidance on interest rates." However, Bessent also emphasized that Fed officials should remain cautious regarding the potential effects of the conflict in Iran on inflation.

Regional developments are also being closely monitored in the markets. Officials announced that Lebanon and Israel are evaluating a US-backed proposal that plans for the transfer of some Lebanese territories, which Israel occupied during the clashes with Hezbollah, back to the Lebanese army. It is stated that this proposal could be an important step for Lebanon to regain control in the occupied territories.

Among other precious metals, spot silver fell 0.2% to $57.33, and platinum declined 0.2% to $1,575.85. Palladium, unlike the others, rose 0.3% to $1,170.25.

News Source: 12punto