Gold Falls Amid Rate Hike Expectations and Geopolitical Uncertainty

Gold's value has been fluctuating wildly as central banks continue to hoard the precious metal while traders anticipate a rate hike from the Federal Reserve. The Fed's hawkish stance, led by Chair Kevin Warsh, has pushed up expectations of a 25-basis-point increase in September to 66.4 percent, according to the CME FedWatch Tool.

The geopolitical situation is also playing a role, with the US strike on Iranian rocket launchers sending oil prices soaring while gold sinks. Normally, such an escalation would send gold prices up as a safe haven, but the rate hike expectations are overriding this effect.

Central banks have been buying gold at a record pace, purchasing 288.9 tonnes in the second quarter of 2026, a 62.4 percent increase year-on-year. This institutional demand has kept gold prices relatively stable, despite the current pullback.