Gold Slides Below $4,000 as Middle East Tensions and Fed Hike Trade Tighten Risk Appetite

Gold fell to $3,950.32 per ounce on June 12, 2024, marking its second dip below the $4,000 threshold in the past two months. The decline follows a sharp uptick in Middle East tensions that has heightened geopolitical risk, while the Federal Reserve’s continued rate‑hike cycle has pushed U.S. Treasury yields higher, tightening risk appetite across the markets.

After rebounding to $4,050 earlier this month, gold’s price has been pressured by the Fed hike trade – a strategy that sees investors buying Treasury bonds to lock in higher yields, thereby reducing demand for safe‑haven assets like gold. The combination of sustained Fed tightening and renewed conflict risk has nudged the metal back into the $3,950‑$4,000 corridor, prompting analysts to warn that further dips could occur if either the geopolitical situation escalates or the Fed signals additional rate hikes.

Market watchers are now monitoring the Fed’s policy meetings and any new developments in the Middle East, as these factors will likely continue to influence gold’s trajectory in the coming weeks.