Gold posts biggest quarterly drop in 13 years as hawkish Fed weighs on prices

Gold prices recorded their steepest quarterly decline in 13 years over the past three months.

Spot gold was trading at $4,027.03 per ounce as of 1:40 p.m. Eastern time Tuesday, up 0.3 percent from the previous session, according to Reuters.

The metal briefly touched an intraday low of $3,943 per ounce that day, its weakest level since November last year. The August gold futures contract on the New York Mercantile Exchange settled at $4,038.50 per ounce, down 40 cents from the prior session, finishing roughly flat.

The Wall Street Journal reported that the front-month gold futures contract fell 13.4 percent in the second quarter — the largest quarterly decline since the second quarter of 2013.

Silver futures also dropped 20.4 percent in the second quarter, the steepest quarterly fall since January 2020, the newspaper said.

Because gold pays no interest or dividends, its price tends to fall against the dollar when US real interest rates rise.

Growing inflation concerns stemming from the war in Iran and its spillover effects have fueled expectations that the Federal Reserve and other major central banks will shift toward tighter monetary policy — a dynamic that has weighed on international gold prices.

"US inflation remains above the Fed's 2 percent target, and markets expect the Fed to keep rates higher for longer or even consider raising them," said Edward Meyer, an analyst at financial intermediary Marex.