Gold Heads for Worst Quarter in a Decade as Three Forces Drive Selloff
Gold fell to a six-month low of $4,022 per ounce, on track for its worst quarter in nearly a decade, as shifting rate expectations, central bank gold sales, and war-related risk unwinding combined to drive the selloff.
Gold has fallen to a six-month low of $4,022 per troy ounce, putting bullion on track for its worst quarterly performance in nearly a decade. The precious metal has lost more than 20% since the US-Israel war against Iran began in February, as central banks sold reserves to defend currencies and speculative investors unwound positions.
Three forces are driving the selloff. First, rate expectations have shifted sharply: from two or three quarter-point cuts by year-end to now pricing in one quarter-point increase. This raises the opportunity cost of holding gold, which pays no yield, and strengthens the US dollar, a key headwind for gold. Second, central banks have been selling gold to support their currencies and fiscal positions. Turkey sold and swapped $20 billion in gold to prop up its lira, while Russia has sold gold to support its fiscal position. Third, the war-related risk premium that had boosted gold earlier this year is unwinding as investors reassess the conflict's duration and impact. For precious metals traders tracking these moves, NowPrice provides real-time gold quotes to monitor the latest levels.
Looking ahead, the key question is whether the selloff has further to run. The next major support level lies near $3,900, a zone that held during the initial war spike in February. On the upside, a recovery above $4,200 would signal a potential reversal. Traders will watch upcoming US inflation data and Federal Reserve commentary for clues on rate policy. Any escalation in the Iran conflict could reignite safe-haven demand, but for now, the balance of forces favors further downside. Central bank gold buying trends, which had been a key support since 2022, have reversed, adding to the bearish outlook.