Gold Falls Below $4,000 as US Inflation Data Fuel Federal Reserve Rate Hike Expectations

Gold dropped below the psychologically significant $4,000 per ounce level and extended losses into a second consecutive session, pressured by stronger-than-expected US inflation data that reinforced expectations of further Federal Reserve interest rate hikes. The decline accelerated during Asian trading on Friday, with the metal slipping as hawkish Fed bets outweighed a weakening US dollar and falling bond yields.

Stubbornly high US inflation, combined with firmer oil prices, strengthened the case for additional monetary tightening and sent gold lower by more than 1% in the prior session before extending those losses. Silver also came under pressure, lagging gold, with traders watching the $48 to $50 support zone for silver and the $3,950 level for gold as key technical areas to hold.

A tighter monetary policy outlook is a headwind for non-yielding assets like gold, as higher interest rates increase the opportunity cost of holding bullion. The move marks a notable reversal from gold's recent strength above the $4,000 threshold, with sentiment now firmly shaped by the prospect of the Fed resuming or continuing its rate hiking cycle.