Gold continues to plummet: Interest rate fears outweigh safe-haven appeal

June 11, 2026

The price of gold fell by more than three percent yesterday, Wednesday. Instead of benefiting from the military escalation between the U.S. and Iran as a safe-haven asset, the precious metal came under pressure. This is because the market currently views the conflict in the Middle East primarily as an inflationary factor with direct implications for U.S. monetary policy.

While military conflicts in the Middle East traditionally boost demand for gold, the impact on the energy market currently outweighs this effect. Iran responded to U.S. military strikes near the Strait of Hormuz with counterattacks on U.S. bases. As a result, crude oil prices rose further, fueling general price pressures. Instead of speculating on interest rate cuts, the market is now betting on a more restrictive monetary policy by the Federal Reserve. Since rising interest rates increase the opportunity cost of interest-free gold, this factor overshadows the classic safe-haven appeal.

Gold: Expectations of a U.S. interest rate hike this year weigh on the market

Market expectations have shifted noticeably: A probability of just under 67 percent for an interest rate hike in December is now priced in. Although the latest US consumer price data—with a 0.2 percent rise in the core rate in May—was more moderate than in the previous month, this did little to alter the underlying restrictive trend. Particular attention is now focused on the US producer price index, as higher energy costs are reflected there particularly early on.

Technically, the price decline has clouded the chart picture, as gold has broken below the trading range established since late March. The closing price near the daily low signals ongoing short-term weakness.

Structural pillars for gold remain intact

Despite this interest-rate-driven consolidation, the structural pillars supporting the precious metal remain intact. Many observers agree that, in the long term, central banks’ continued gold purchases, growing global government debt, and concerns about currency stability continue to serve as a robust fundamental foundation. Inflation thus has a dual effect: while it weighs on the interest rate outlook in the short term, it reinforces gold’s role as a monetary asset in the long term.

Source: https://goldinvest.de/en/gold-stuerzt-weiter-ab-zinsangst-schlaegt-sicheren-hafen