Gold Retreats from June Highs as Hawkish FOMC Minutes, US-Iran Tensions Underpin Dollar

Spot gold retreated from June highs on Thursday and was last trading near $4,499.33, after earlier touching its highest level since early June during Asian hours before giving back some of the previous day's more than 3% gains on dollar strength.

**Hawkish Minutes Bolster Dollar, Weigh on Gold**

The Federal Reserve's June meeting minutes carried a hawkish tone, emerging as a key factor pressuring gold prices. The minutes showed that while voting members unanimously agreed to hold rates steady, participants were clearly divided on the future path of rates, with the 3.8% rate expectation implied by the median dot plot interpreted by markets as signaling the possibility of further hikes. The signal boosted the dollar, with the dollar index, which measures the greenback against six major currencies, last trading near 99.60, putting direct pressure on dollar-denominated gold. Meanwhile, long-dated US Treasury yields held at elevated levels, with the 10-year yield at one point climbing toward 4.75% and the 30-year yield hitting its highest level since 2007, further raising the opportunity cost of holding non-yielding gold.

**US-Iran Standoff Lifts Oil Prices and Inflation Concerns**

Geopolitical tensions are also indirectly pressuring gold. The standoff between the US and Iran over the Strait of Hormuz continues, with President Donald Trump stating he has no intention of extending the expiring memorandum of understanding, keeping supply risks for Middle Eastern crude elevated. Firm oil prices have rekindled market concerns about inflation, meaning the possibility of further Fed rate hikes has not entirely disappeared. However, recent US employment, consumer spending, and inflation data have been broadly soft, which has to some extent tempered market expectations for near-term Fed rate hikes, potentially limiting the sustainability of the dollar's rebound.

**Divergent Views on Gold's Outlook**

The market is currently divided on gold's outlook. On one hand, hawkish minutes and a firm dollar are weighing on prices; on the other, some strategists believe the market may still reprice expectations for a dovish Fed, potentially capping dollar upside. According to the CME FedWatch tool, market expectations for near-term Fed rate hikes have cooled somewhat, providing some underlying support for gold prices.