Gold Falls To Seven-Month Low Below $4,000 On Rising Fed Hike Bets, Traders Brace For US PCE Data

Gold price (XAU/USD) tumbles to around $3,995 during the early Asian session on Thursday. The precious metal extends the decline to below the $4,000 psychological level for the first time since November 2025 on the prospect of higher interest rates and a stronger US Dollar (USD). All eyes will be on the US May Personal Consumption Expenditures (PCE) data, which will be published on Thursday. 

Traders have ramped up bets on US interest rate hikes this year after the US Federal Reserve (Fed) delivered hawkish messages at its June policy meeting and as fears of inflationary pressures stemming from the Iran war persist. It’s worth noting that Gold is often used as a hedge against inflation but does not yield interest, making it less attractive when interest rates are high.

Markets are now pricing in a 34.2% chance of a 25-basis-point hike at the July meeting, up from 8.5% a week ago, and 66.4% for September, up from 29.1%, according to the CME FedWatch tool.

“Gold is clearly trading in sympathy with market expectation on rate rising in the US,” as a focus on inflation by Federal Reserve Chair Kevin Warsh strengthened expectations of a more hawkish central bank, said Darwei Kung, head of commodities at DWS Group.

Traders brace for the US May PCE data, the Fed’s preferred inflation measure, later on Thursday for more clues about the monetary policy outlook. Any signs of easing inflation in the US could weigh on the Greenback and provide some support to the USD-denominated commodity price.