Gold drops over 1% amid strong dollar, oil surge

June 10, 2026 (MLN): Gold prices extended losses on Wednesday, falling more than 1% to their lowest level in nearly three months as escalating tensions between the United States and Iran boosted the U.S. dollar and crude oil prices, reducing investor demand for the precious metal.

Currently, spot gold is slightly up 3.36% to $4,179.36 an ounce as of [10:15 pm] PST, according to data reported by Mettis Global.

A stronger dollar made gold more expensive for buyers using other currencies, while higher oil prices intensified concerns that inflation could remain elevated, reinforcing expectations that U.S. interest rates will stay higher for longer.

Market participants said the recent decline in gold has been driven largely by changing expectations around U.S. monetary policy, as reported by CNBC.

Rising Treasury yields and a firmer dollar have increased the opportunity cost of holding non-yielding assets such as gold, putting additional pressure on bullion prices.

The latest geopolitical developments also influenced market sentiment after the United States carried out military strikes against Iran on Tuesday.

The action followed claims by U.S. President Donald Trump that Iran had downed an American Apache helicopter near the Strait of Hormuz, adding uncertainty to an already fragile regional security environment.

Investors have consequently increased bets that the Federal Reserve may need to maintain a restrictive policy stance to contain inflationary pressures.

According to market pricing, traders now see a strong possibility of a U.S. interest rate increase before the end of the year.

Although gold is traditionally viewed as a safe-haven asset and a hedge against inflation, higher interest rates generally reduce its attractiveness because the metal does not generate income.

Attention is now turning to key U.S. inflation indicators scheduled for release this week.

Markets are closely watching the May Consumer Price Index (CPI) data due later on Wednesday, followed by the Producer Price Index (PPI) report on Thursday, for further clues on the Federal Reserve’s next policy moves.

Copyright Mettis Link News