• Gold prices sank 2.62% to $4,150 per ounce, pressured by a strengthening dollar and rising bond yields.
  • Reduced expectations for near-term Federal Reserve rate cuts have diminished gold's appeal as a hedge.
  • Technical analysts flag potential for further downside if key support levels break.

Gold's safe-haven luster faded sharply on Thursday, with spot metal sliding to $4,150 an ounce, down 2.62% on the day, as a resurgent dollar and higher yields triggered a broad retreat in the precious metals complex.

The decline accelerated after spot gold breached the $4,200 psychological level in early trading, with stop-loss orders piling on as momentum turned bearish. According to traders familiar with the activity, a long squeeze among speculative positions added to the selling pressure, with open interest in COMEX gold futures dropping notably.

“The macro backdrop has flipped against gold in the short term,” said a senior metals strategist at a European bank, speaking on condition of anonymity. “A hawkish repricing of Fed expectations is driving the dollar and real yields higher, and gold is bearing the brunt.”

Market-implied probabilities for a rate cut at the Fed's June meeting now stand at just 32%, down from over 50% a month ago, according to CME FedWatch data. The resulting dollar rally pushed the Bloomberg Dollar Spot Index up 0.6%, while 10-year U.S. Treasury yields climbed to 4.78%, their highest since late 2025.

Technicians point to a break below the 50-day moving average near $4,210 as a bearish signal. “If gold fails to reclaim $4,150 by Friday’s close, the next support sits around $4,080 and then $4,000,” a technical analyst at a New York-based brokerage said. “We’re watching for a potential flush lower.”

Despite the day’s rout, some market participants caution against reading too much into a single session. Central bank purchases remain a steady undercurrent of demand, and geopolitical risks—including unresolved trade tensions and conflicts in Eastern Europe—could quickly reverse sentiment.

“Gold’s long-term narrative is intact, but the short-term pain is real,” the strategist added. “Without a catalyst like an escalation in trade talks or a surprise dovish pivot from the Fed, the path of least resistance is lower for now.”

A spokesperson for the World Gold Council declined to comment on day-to-day price moves. Efforts to reach representatives of the London Bullion Market Association were unsuccessful by press time.

Editor's note: This article has been updated to reflect intraday price action as of 3:30 p.m. New York time.