Metals Fall Amid Hawkish Fed Stance and Rising US Dollar

Tashkent, Uzbekistan (UzDaily.uz) — The metals market is ending June under pressure, as a more hawkish tone from the US Federal Reserve and a strengthening dollar force investors to exit precious and industrial metals, according to an assessment by Alpari analyst Anna Bodrova.

Gold dropped to US$4,170 per ounce, marking a low of more than three months. The primary factor driving this downward pressure was a sharp increase in the US dollar, which reached a one-year high following hawkish signals from the Fed. Nearly half of the members of the US regulator allow for the possibility of further rate hikes in 2026. The market assessment of the probability of a rate hike in September rose to approximately 68%, compared to around 30% a week earlier. According to the analyst, the higher the interest rates and bond yields become, the less attractive gold becomes, as it yields no interest.

Silver appears even weaker, with quotes falling to US$63 per ounce. An additional factor putting pressure on safe-haven assets was progress in US-Iranian negotiations. Washington issued Tehran a temporary license for oil exports, and shipments through the Strait of Hormuz are gradually recovering, which restrains energy price growth and reduces demand for safe-haven assets.

Industrial metals are also experiencing a correction. Copper fell to US$6.24 per pound, its lowest level since May. Market participants fear that high interest rates will restrain economic activity and the demand for raw materials. Nonetheless, the long-term outlook remains relatively stable: copper prices have risen by 28% over the past 12 months, and demand from the energy sector, data centers, and artificial intelligence projects continues to support the market.

Aluminum declined to US$3,320 per tonne, hitting its lowest mark since late March. Pressure on quotes is driven by the prospect of recovering supplies from the Gulf countries, weak economic data from China—the world's largest consumer of the metal—as well as expanding production in China and Indonesia, which heightens concerns over excess supply.

Platinum fell below US$1,650 per ounce, reaching its lowest level since November last year. However, according to Bodrova's assessment, the fundamentals of the platinum market remain relatively stable, as supply is limited and mining in key producing countries faces high costs and infrastructural difficulties.

In the analyst's opinion, the metals market is experiencing a shift in priorities. While risks to raw material supplies from the Middle East were the primary driver until recently, investors have now refocused on the actions of the Fed and the dynamics of the dollar. A determining factor for gold, silver, and other metals in the second half of the summer could be US inflation data, including the PCE index, which is expected to be published this week.