Gold Plummets as Fed Hawkish Tone and Dollar Surge Triggers Steepest Decline in Decade for Precious Metals

Gold Plummets as Fed Hawkish Tone and Dollar Surge Triggers Steepest Decline in Decade for Precious Metals​

Gold and silver are set for a challenging conclusion to the June quarter, with both metals booking losses. This reversal comes after significant prior gains, as bullion prices face intense pressure driven by shifting monetary policy expectations and a strengthening US dollar. Gold is currently on track for its steepest quarterly fall in a decade, while silver marks its worst performance in four years.

Metals Face Steep Corrections Amid Macro Shift​

The retreat in precious metals has been sharp. Gold has registered losses of nearly 12 percent during the June quarter alone, marking its most substantial decline since December 2016. Silver is performing even more weakly, having slipped 17.6 percent, which represents its worst quarterly performance since June 2022.

The downside risk is stark when viewed from peak levels. Gold, which had previously touched an all-time high of $5417 an ounce, has subsequently fallen by 24 percent. Silver also shows severe weakness; having reached a record high of $117 an ounce on January 28, the metal has since decreased around 47 percent.

Reversal After Strong Commodity Rally​

This downturn contrasts sharply with the robust performance observed over the last two years for these industrial and investment metals. Gold surged by over 65 percent in 2025 and climbed 28 percent in 2024, noting a 10 percent rise between January and March 2026. Silver followed a comparable ascent, climbing 148 percent in 2025 after gaining 22 percent in 2024.

Despite the temporary easing of geopolitical tensions following an agreement signed by the US, Iran, and Israel, the precious metals continue to slide. The market appears to be discounting the peace deal in favor of heightened global economic concerns.

Dominance of Dollar and Rate Expectations Drive Sales​

Experts suggest that the sustained slump is primarily linked to a powerful combination of factors: a strengthening US dollar, elevated US bond yields, and evolving expectations regarding Federal Reserve interest rate policy. As neither gold nor silver generate interest, a "higher-for-longer" rate environment significantly diminishes their attractiveness compared to fixed-income assets like Treasuries.

The market is also reacting negatively to the recent slump in technology stocks. This additional pressure comes amid persistent inflation concerns that fuel fears of further Fed rate hikes. A gauge of the dollar has gained more than 1 percent since the central bank's last meeting.

Analyst View: Bullion Pressure Hinges on Dollar Strength and Inflation Trajectory​

Analysts point to the Federal Reserve’s hawkish tone as a major destabilizing force, overriding positive geopolitical developments. Deveya Gaglani, Senior Research Analyst-Commodities at Axis Direct, noted that while geopolitical concerns are easing and crude oil prices are correcting, bullion remains under strain due to the Fed's aggressive stance amid an increase in inflation and a surge in the dollar index, which has reached a one-year high.

Gaglani further projected that gold and silver prices will remain negative going forward as long as the dollar maintains levels above $100. Meanwhile, Federal Reserve Bank of Chicago President Austan Goolsbee voiced concern over stubborn inflation, questioning whether all factors driving recent price increases were temporary. He stressed that the economy has been grappling with an inflation problem significantly above target and moving in the wrong direction. Traders are now highly focused on the upcoming US personal consumption expenditures price index, which is anticipated to show acceleration.