On Tuesday, gold futures dropped 1.5% to $4,142 an ounce, while silver futures fell over 5% to $61.80 before recovering slightly to settle at $62.25. This decline is attributed to a global sell-off in tech stocks driven by fears of higher interest rates, which have historically pressured non-yielding assets like gold.
The Federal Reserve's recent hawkish stance, particularly under Chairman Kevin Warsh, has heightened expectations for interest rate hikes by year-end, further impacting gold's attractiveness. Analysts from major banks have adjusted their forecasts, with Bank of America downgrading its previous target for gold from $6,000 to a more cautious outlook due to ongoing inflation concerns.
Deutsche Bank has also revised its price target for gold to $4,300 an ounce in Q3, contingent on the Fed's actions, while warning that multiple rate hikes could push prices down to as low as $3,800.
This shift in sentiment among analysts indicates a growing skepticism about gold's role as a safe haven amid tightening monetary policy, which could lead to further volatility in the precious metals market