On Thursday, international gold prices erased earlier gains, falling during the session toward $4,080 per ounce, nearing the lowest level since November 2025. Despite ongoing geopolitical tensions, the market is currently focusing more on inflation, interest rate trajectories, and rising bond yields, which continue to weigh on gold’s performance.
Gold prices have fallen nearly 27% from their historical high of $5,591. Over the past few weeks, the market's repricing of major central bank policy prospects has accelerated significantly, intensifying downward pressure on gold.
U.S. inflation data has raised expectations for rate hikes.
In the United States, the May Producer Price Index rose 6.5% year-over-year, the highest level since late 2022 and slightly above market expectations. Previously released consumer inflation data also showed that prices increased at the fastest pace in nearly three years.
The report indicates that this round of inflationary pressures is linked to rising energy costs following disruptions in the Strait of Hormuz. As a result, investors are betting that the Federal Reserve may maintain restrictive policies into 2026, with even further rate hikes not ruled out.
Gold itself does not generate interest income. When interest rates and government bond yields rise, some capital typically shifts toward fixed-income assets, reducing gold's appeal.
The European Central Bank's interest rate hike has added additional pressure.
In addition to U.S. factors, pressure on gold prices has also come from Europe. The European Central Bank raised interest rates for the first time since 2023 and increased its inflation forecasts for 2026 and 2027.
This move reinforces the market view that, even amid slowing economic growth, major central banks will prioritize combating inflation. Under the “higher for longer” interest rate environment, external pressures on gold have further increased.
The market is watching the $4,000 support level.
From a trend perspective, gold prices recently fell below the 200-day simple moving average for the first time in approximately 960 days. The market typically regards this moving average as a key indicator of long-term trends, and a breach below it often signals a significant weakening of the upward trend.
The report suggests that if selling pressure continues, the next key psychological level for gold is around $4,000. Should this level be breached, the subsequent support range may shift down to $3,850–$3,900.
To alleviate the current weakness, gold needs to reclaim the $4,200 level and reestablish support above the 200-day moving average. Until then, any rebound may still face sustained selling pressure.