Gold Prices Hit One-Year Low as Middle East Hopes Fade and Inflation Fears Grow

Price Drop

Gold prices fell sharply by three percent on Thursday, marking a third straight day of losses and hitting their lowest mark in over a year. Spot gold dropped two point seven percent to three thousand eight hundred eighty dollars and ninety-three cents per ounce by one point fifty-three p.m. Eastern Time. US gold futures for December delivery closed two point nine percent lower at three thousand eight hundred eighty-five dollars and thirty cents per ounce. Other precious metals also fell as spot silver dropped three percent to fifty dollars and twelve cents per ounce. Spot platinum lost one point two percent to one thousand five hundred eighteen dollars and forty-nine cents, while spot palladium dropped three point one percent to nine-hundred ninety-five dollars and ninety-one cents.

Market Causes

The drop came as oil prices climbed because hopes for peace in the Middle East faded. US President Donald Trump stated on social media that the country did not need a deal with Iran. Higher oil prices raised worries about inflation and pushed up expectations that the US Federal Reserve will keep interest rates higher for longer. David Meger, director of metals trading at High Ridge Futures, noted that higher energy costs support a hawkish central bank, which creates a headwind for gold. Jim Wyckoff, a market analyst at American Gold Exchange, added that a hot US inflation reading, hawkish remarks from Fed officials, and a strong US dollar also pressed the market down. Traders now see an eighty-seven percent chance of a twenty-five-basis-point rate hike in December. Higher interest rates make non-yielding bullion less attractive to buyers. Independent metals trader Tai Wong explained that the decline triggered stop orders on long positions built up over the past two weeks when gold was recovering from tech share slumps tied to AI spending worries. Nvidia CEO Jensen Huang's exit also stirred concerns about chip export policy.

Context

Investors are now waiting for the US producer price index data scheduled for release on Friday. Precious metal prices often move inversely to interest rates and the strength of the US dollar. Central banks use rate hikes to cool down rising consumer prices across the broader economy.