Gold Falls on New US Interest Rate Expectations

Precious metal markets are experiencing a contraction phase, with gold facing a weekly decline as traders reconsider their forecasts for U.S. monetary policy. The situation reflects a significant shift in outlook compared to previous days when market expectations were different.

U.S. Rate Outlook Revised: Fewer Cuts Expected in 2026

Recent economic assessments have led market participants to scale back their interest rate cut forecasts. While earlier in the week, two reductions were anticipated this year, new estimates now indicate only one cut. Matt Britzman, an analyst at Hargreaves Lansdown, emphasizes that this change in direction mainly stems from strong economic data from the United States, reinforcing the idea that the Fed may keep a more restrictive stance than previously thought.

In a context of higher-than-expected rates, non-yielding assets like gold suffer, as increased borrowing costs make investments in assets that do not generate cash flows less attractive.

Inflation and Oil: Factors Pressuring Gold Downward

Geopolitical tensions in the Middle East continue to exert upward pressure on oil prices. This increase has raised concerns among analysts about potential inflationary pushes, which could lead to further monetary tightening. Jin10 reports that, according to Britzman, despite uncertainties related to regional conflicts, energy price rises remain a critical factor to monitor.

The combination of solid macroeconomic data and inflation risks has thus fueled expectations of a less accommodative monetary policy, undermining traditional supports for gold, which generally benefits from lower rates.

Silver Shows Resilience as Traders Reposition

Meanwhile, at the start of European trading sessions, both gold and silver showed positive movements, although their gains were later tempered by evolving rate expectations. However, the white metal demonstrated more significant gains than gold, suggesting some traders are gradually recalibrating their portfolios in response to new market conditions.

Today’s session highlights how the decline in gold mainly reflects adjustments in forecasting models rather than a change in geopolitical fundamentals, which remain complex and uncertain.