Gold Pulls Back as Dollar Strength and Fed Risk Offset Safe Haven Demand

Gold prices slipped toward $4,520 per oz, heading for another weekly decline as a stronger US dollar and renewed expectations of Fed tightening reduced demand for the non yielding metal.

Key insights:

• Spot gold traded around $4,523 per oz, down about 0.2% in early trading, while gold futures eased near $4,524 per oz.
• Gold was down around 3.7% over the past month, but remained up about 34.7% year on year.
• The dollar stayed close to a six week high, making gold more expensive for holders of other currencies.
• Market expectations have shifted, with traders assigning around a 60% probability to a Fed rate hike by December 2026.
• US CPI rose 3.8% year on year in April, keeping pressure on the Federal Reserve to remain cautious.
• Higher oil prices and uncertainty around US Iran talks continue to support inflation concerns, but they have not been enough to offset pressure from stronger yields and the dollar.

The main takeaway is that gold remains caught between two opposing forces. Geopolitical risk and inflation concerns support safe haven demand, while a stronger dollar and higher rate expectations raise the opportunity cost of holding gold.

For markets, this is not yet a collapse in the gold story. It is a repricing of rate expectations inside a still elevated geopolitical and inflation environment.