Gold drops to one-week low as dollar surges on renewed Iran strikes

Gold prices fell to their lowest level in nearly a week on Wednesday, pressured by a firmer U.S. dollar and renewed geopolitical tensions that boosted oil prices and stoked inflation concerns, as investors braced for the release of the Federal Reserve's June meeting minutes later in the day.

Dollar Strength and Iran Strikes Drag on Bullion

Spot gold dropped to around $4,100 per ounce on Wednesday, retreating from a two-week high hit on Monday, according to Reuters. The decline came as the U.S. dollar index climbed to 101.21, its highest since July 2, after the United States resumed military strikes on Iran. The stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.reuters+2

The selloff marked a reversal from last week's rally, which had been fueled by weaker-than-expected U.S. jobs data that led traders to scale back expectations of a near-term interest rate hike. Markets now see about a 56% chance of a rate increase in September, down from more than 60% before the employment report, according to the CME FedWatch tool.cnbc

Fed Minutes in Focus

The Federal Reserve is set to release the minutes from its June 16–17 meeting on Wednesday afternoon. At that meeting, Fed Chair Kevin Warsh's first at the helm, the committee unanimously held the federal funds rate at 3.50%–3.75%. The latest projections revealed a deeply divided committee, with nine of 19 policymakers expecting at least one more rate hike before year-end.tradingview+2

Analysts at The Wall Street Journal News Corp ↘ 1.21% noted that the minutes are expected to influence the short-term direction of Treasury yields and, by extension, gold prices. Higher rates weigh on non-yielding bullion by increasing the opportunity cost of holding it.wsj

Central Bank Demand Provides Floor

Despite near-term headwinds, structural support for gold remains intact. The World Gold Council reported that central banks added a net 41 metric tonnes to their gold reserves in May 2026, the second-highest monthly total of the year. Poland led purchases with 18 tonnes, followed by China with 10 tonnes — its 20th consecutive month of buying. Uzbekistan, Kazakhstan, and Singapore also added to their holdings.indexbox+1

The council's 2026 survey found that 89% of central bank respondents expect global gold reserves to continue rising over the next 12 months, while a record 45% plan to add gold to their own reserves.gold+1