Gold Price Weakens Amid Easing Geopolitical Tensions and Hawkish Fed Signals

Jakarta, Indonesia – The price of gold experienced a downturn this past week, primarily influenced by the de-escalation of geopolitical tensions in the Middle East and hawkish signals from the U.S. Federal Reserve. Spot gold closed at US $3,367.98 per troy ounce on Friday, June 20, 2025, a 1.87% decrease from the previous week’s close of US $3,432.19 [[1]].

Factors Contributing to the Gold Price Decline

The decline in gold prices began at the start of the week, with prices opening at US $3,382.93 on Monday, June 16. Throughout the week,gold struggled to surpass the $3,400 level,eventually hitting a low of US $3,367.98 on friday. Several factors contributed to this downward trend.

Easing Middle East Tensions

A key factor impacting gold prices was the perceived stabilization of the situation between israel and Iran. After a period of heightened tensions in early June, the situation appeared to de-escalate. According to a Focus Teacher’s report on June 21, 2025, this reduced the need for investors to seek safe-haven assets like gold. Pavilonis, a senior market strategist at Rjo Futures, noted that conditions in the Middle East became “more controlled” during the week, diminishing the risk protection sentiment that typically boosts precious metal prices.

Hawkish Stance from the federal Reserve

Adding to the pressure on gold was the hawkish tone emanating from the Federal Reserve. While the central bank maintained its benchmark interest rate in the range of 4.25%-4.50%, Chairman Jerome Powell signaled that future interest rate cuts are likely to be slower than market expectations. powell emphasized the continued risk of inflation, especially considering planned increases in import tariffs by former U.S. President Donald Trump. This caused the market to temper expectations of near-term monetary easing, making gold-which does not offer yields-less attractive to investors.

Pro Tip: Keep an eye on geopolitical events and central bank policies, as these can substantially impact gold prices.

according to Tai Wong, a senior metal analyst quoted by Reuters, “Gold needs to return to the level of US $3,400 to give a strong signal to the bulls.”

SPDR Gold Trust: A Sign of Continued Support

Despite the overall weakness in spot prices, there where some positive signals. The SPDR Gold Trust (GLD), the world’s largest gold ETF, reported an increase in its holdings of 0.30% to 950.24 tons as of June 20, 2025, up from 947.37 tons on June 18. This increase suggests that large investors continue to view gold as a strategic,long-term asset.

However, this accumulation was not sufficient to offset the weekly pressure resulting from the easing of geopolitical tensions and the stricter monetary policy outlook.

Did You Know? Gold ETFs allow investors to gain exposure to gold without physically owning the metal.

Gold Price Performance

Outlook for Gold Prices

While gold weakened this week, it has still recorded ample gains throughout 2025. In the short term, gold prices are likely to remain volatile. A resurgence of conflict in the Middle East or a more dovish stance from the Federal Reserve could potentially drive prices back above US $3,400.

Hamad Hussain, an economist at Capital Economics, stated, “As long as geopolitical uncertainty and US fiscal concerns are still burning, gold remains the main escape of investors.”

What factors do you think will have the biggest impact on gold prices in the coming months? How much of your portfolio is allocated to precious metals?

Disclaimer: this article is for informational purposes only and does not constitute financial advice. Please consult with a qualified financial advisor before making any investment decisions.

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