Gold slides as Iran deal doubts and hawkish Fed boost USD - FXStreet

Gold prices are plummeting, logging their second consecutive weekly loss, as persistent uncertainty surrounding a US-Iran nuclear deal converges with a resolutely hawkish Federal Reserve, driving a flight to the safe-haven US Dollar. The precious metal, trading around $4,200 an ounce, absorbed a brutal 4.44% drop on June 10 following unexpectedly hot US inflation data, pushing it decisively below its critical 200-day moving average. The sharp decline is primarily fueled by a potent cocktail of escalating Middle East tensions—despite President Trump's premature claim of an imminent Iran deal, swiftly refuted by Tehran—and strong signals from the Fed that higher interest rates are here to stay, with markets now pricing in a 70% chance of a hike by year-end. This hawkish pivot, underscored by May's Consumer Price Index soaring to 4.2% and Producer Price Index reaching 6.5% year-on-year, has bolstered the US Dollar Index, making dollar-denominated gold less attractive and increasing its opportunity cost. Looking ahead, market participants are bracing for intensified volatility, with gold immediate trajectory hinging on concrete developments in the US-Iran diplomatic saga and fresh guidance from the Fed upcoming June 16-17 meeting, the first under new Chair Kevin Warsh. While central bank demand, particularly from the People's Bank of China, offers some structural support, the short-term outlook remains decidedly bearish as geopolitical jitters and inflation concerns continue to favor the surging greenback.