Fed hike bets drag gold to loss

June 05, 2026 (MLN): Gold prices declined on Friday, as Middle East tensions dimmed prospects for a U.S.-Iran peace deal while inflation concerns and fears of interest rate hikes weighed on sentiment.

Currently, spot gold is slightly down 0.23% to $4,436.03 an ounce as of [11:20 am] PST, according to data reported by Mettis Global.

Iran-backed Hezbollah rejected a new ceasefire in Lebanon, while Israel said it would not withdraw its troops from the country, undermining U.S. President Donald Trump's push to halt the fighting as part of broader peace efforts with Tehran.

Although gold is traditionally viewed as an inflation hedge, higher interest rates tend to pressure the non-yielding metal.

Markets are currently pricing in a 51% probability of a Fed rate hike by December, according to CME Group's FedWatch tool, CNBC reported.

Investors are awaiting U.S. nonfarm payrolls data for May, due later in the day, for further clues on the Federal Reserve's monetary policy path.

Other precious metals also declined. Spot silver fell 1.4% to $72.89 per ounce, platinum dropped 1.1% to $1,878.68, and palladium slid 1.7% to $1,298.45, with all metals headed for weekly losses.

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