Gold prices continued to decline on Friday, setting the stage for a second straight weekly loss, as a resurgent U.S. dollar and rebounding oil prices reinforced expectations that the Federal Reserve will keep monetary policy tight for longer. Spot gold fell 0.4% to $4,522.89 an ounce, while U.S. June gold futures eased 0.4% to $4,524.40, reflecting a broader risk-off sentiment that is spilling over into cryptocurrency markets.
The primary drag on bullion has been the dollar's strength, with the greenback holding near a six-week high. This makes gold more expensive for buyers using other currencies and diminishes its appeal as a non-yielding asset. Edward Meir, an analyst at Marex, noted, "What’s been driving gold lower has been the stronger dollar, which in turn is being elevated by ongoing high interest rates pretty much around the world." These conditions are directly relevant to Bitcoin and other crypto assets, which, like gold, do not generate yield and tend to lose luster when interest rates rise.
Markets are now pricing a real possibility of a Federal Reserve rate increase before year-end. CME Group’s FedWatch tool shows a 60% chance of a move by December, a shift that has undermined demand for traditional safe havens. Higher rates increase the opportunity cost of holding assets like gold and cryptocurrencies, encouraging a rotation toward yield-bearing instruments such as bonds. This macro environment is weighing on risk appetite, with Bitcoin and Ethereum particularly susceptible to such shifts.
Geopolitical tensions around Iran have added another layer of complexity. Oil prices advanced as investors questioned whether U.S.-Iran talks could ease Middle East frictions, with the Strait of Hormuz—a critical oil transit chokepoint—remaining a key sticking point. While such flare-ups typically boost safe-haven demand, the dominant force now is the stronger dollar and hawkish Fed bets, muting any upside for gold and, by extension, for crypto as a hedge.
Federal Reserve developments remain a focal point. President Trump is set to swear in Kevin Warsh as the new Fed chair, while Richmond Fed President Thomas Barkin signaled that the central bank might need to consider further rate hikes if inflation persists. Investors are now closely watching upcoming U.S. data and Fed commentary, recognizing that any sign of a dovish pivot could weaken the dollar and provide relief to both gold and crypto markets.
