Gold price slide reflects rate hike fears, not geopolitical risk
This digest was compiled by AI from multiple sources — links to the originals are below.
Spot gold traded near $4,028 per troy ounce on July 14, down 17% over three months. The correction follows a sharp rise in oil prices amid US-Iran tensions, fueling inflation fears and expectations of Federal Reserve rate hikes. Higher rates reduce gold's appeal as a non-yielding asset and strengthen the dollar, pressuring prices further.
The Correction
Spot gold fell to approximately $4,028 per troy ounce on July 14, according to market data. Over the past week, gold lost 1.93%; over the past month, 4.53%; and over three months, nearly 17%. For Kazakh investors who bought gold recently, the return has been minimal: one gram of gold cost 60,060 tenge in early August 2025 and 61,290 tenge today, a gain of only about 2% per year, per National Bank of Kazakhstan data.
Rate Expectations
The sell-off is driven by shifting expectations for US monetary policy, not by geopolitical turmoil, according to Reuters. Rising oil prices due to US-Iran tensions have stoked inflation fears, leading markets to price in a higher probability of Federal Reserve rate hikes. Higher rates make gold less attractive compared to yield-bearing assets like bonds, and a stronger dollar further weighs on gold prices.
Kazakhstan Context
Over the same period, tenge-denominated deposits yielded up to 20% annually, while dollar bonds returned about 5-6%, according to National Bank data. Gold has underperformed these traditional savings instruments on a short-term horizon. Analysts note that gold's role as a safe haven is being tested as investors reassess asset allocations in a rising-rate environment.
Central Bank Gold Holdings
Central banks are among the largest holders of physical gold. Their decisions to buy or sell can move prices, adding a supply-demand dynamic beyond monetary policy expectations.
Gold Surpasses $5,100
Gold prices surged past $5,100 per troy ounce as central banks and investors sought refuge from geopolitical risks and Trump-induced market volatility, according to Reuters. The rally reflects constant geopolitical pressure from the US, contrasting with the earlier sell-off described in the article.
What's Next
The Federal Reserve's next policy meeting in September will be closely watched for any signal on rate changes. It remains unclear whether gold will find support from renewed geopolitical tensions or continue to decline as rate expectations shift.
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Gold price slide reflects rate hike fears, not geopolitical risk
