Gold falls below $4,000 to 8-month low as Fed, geopolitics weigh

Gold prices extended their decline below the $4,000 psychological level on Tuesday as expectations of further Federal Reserve tightening and Middle East uncertainty weighed on the precious metal.

Gold fell below $4,000 per troy ounce on Tuesday, reaching its lowest level in nearly eight months as a stronger dollar and Fed tightening expectations pressured the precious metal.

"MCX Gold extended its bearish momentum with a gap-down opening of nearly 1 percent on Tuesday, tracking weakness in international markets as COMEX Gold hovered around $3,973," Kaveri More, Commodity Fundamental Analyst at Choice Broking, said.

COMEX gold futures fell 0.96 percent to approximately $4,000.3 per troy ounce, while spot gold traded at $4,012.52 at 12:00 UTC, down $11.22 or 0.28 percent on the day. The decline follows a 3.57 percent weekly drop and leaves prices 10.97 percent below levels from one month ago, according to Forbes Advisor data. On the MCX, the August 5 gold contract opened at Rs 1,40,886 per 10 grams, down 1.06 percent from the previous close of Rs 1,42,402, and touched an intraday low of Rs 1,40,450. Silver followed the move lower, with the September 4 MCX contract opening at Rs 2,20,247, down 1.07 percent.

The $4,000 level has emerged as a key psychological threshold — gold last traded above $5,500 in January 2026, when it hit a 52-week high of $5,597.23. A sustained break below $4,000 could accelerate selling pressure toward the next support zone near $3,970, with the US-Iran talks this week and the next Fed meeting set to determine near-term direction.

The selloff reflects a broader recalibration of rate expectations. The US dollar index has strengthened as markets price in the possibility of additional rate hikes, reducing the appeal of non-yielding assets like gold. Uncertainty over US-Iran nuclear negotiations has added a geopolitical dimension, though the dollar's strength has outweighed traditional safe-haven demand.

Gold's decline comes despite continued central bank buying, which supported prices through much of 2025 and early 2026. The World Gold Council's most recent survey showed central banks intend to maintain elevated purchases as they diversify reserves away from the dollar, though that structural demand has been insufficient to offset the macro headwinds in recent weeks.

At current levels, gold is roughly 28 percent below its January 2026 all-time high of $5,597.23 and has erased most of the gains accumulated during the first half of the year. JP Morgan's global research forecast had projected gold would climb toward $4,000 by mid-2026 — a level that has now been reached from the downside.

This article is for informational purposes only and does not constitute investment advice.