Spot gold has tumbled to its lowest level in six months, shedding the safe-haven premium that typically supports the precious metal during periods of heightened geopolitical tension and sticky inflation.
The decline marks a significant reversal for bullion, which had recently rallied on speculation that a diplomatic breakthrough between the United States and Iran could stabilize energy markets.
The primary driver of the selloff is a repricing of Federal Reserve policy.
Growing market consensus that inflation remains persistent has pushed back expectations for rate cuts, strengthening the U.S. dollar and increasing the opportunity cost of holding non-yielding assets.
As real yields rise, the appeal of gold diminishes, prompting traders to unwind short positions only after the metal has already breached key technical support levels.
This development underscores a broader regime shift in commodity markets.