Gold prices fell on Tuesday as expectations for additional Federal Reserve rate hikes rose and geopolitical tensions eased, reducing demand for the safe-haven asset. SPDR Gold Shares (NYSE: GLD) dropped 1.45% to $379.00 at the time of publication. The decline follows a shift in market sentiment driven by a more hawkish outlook from major financial institutions and progress in peace talks involving the United States and Iran.

Bank of America Forecasts Aggressive Hikes

Bank of America shifted to a sharply more hawkish outlook, telling clients on Monday that it now expects the Federal Reserve to raise interest rates by a total of 75 basis points before the end of 2026. Economist Aditya Bhave outlined a path that includes three consecutive 25 basis point increases in September, October, and December. This sequence would lift the federal funds rate to a range of 4.25% to 4.5%, which is about 25 basis points higher and three months earlier than current market pricing.

The call follows a June FOMC meeting that leaned more hawkish than expected under new Fed Chair Kevin Warsh. Bank of America interprets the meeting as a sign that policymakers are placing greater weight on inflation risks. Bhave said the data now argue for rate increases and described the shift as moving from risk management to supply shock management. Core PCE inflation could reach 3.5% in May, which would be about 70 basis points higher than a year earlier. Higher interest rates typically hurt gold because the metal pays no yield and becomes less attractive compared with interest-bearing assets.

Geopolitical Tensions Ease

Gold is also losing some of its safe-haven appeal as geopolitical tensions ease. Iran’s Foreign Minister Seyed Abbas Araghchi said Sunday that the United States will lift its naval blockade of the Strait of Hormuz following the conclusion of talks in Burgenstock, Switzerland. A joint statement from Pakistani and Qatari mediators described the creation of a political oversight committee and a de-confliction unit for Lebanon, with all parties agreeing to a roadmap aimed at reaching a final agreement within 60 days. As the peace process advances, the conflict-driven demand that previously supported gold has diminished.

Market Focus Shifts to Data

Market attention is now focused on upcoming economic data, particularly the May reading on the PCE price index. A hotter-than-expected reading could reinforce the case for rate hikes, while a cooler figure might ease pressure on gold. Technical negotiations between the US and Iran are also scheduled to continue through the week, adding to the potential for market volatility.

Gold has retreated from record highs, yet several gold mining stocks are demonstrating stronger momentum signals according to recent data. SSR Mining Inc., Centerra Gold Inc., and Eldorado Gold Corp. have all climbed the Benzinga Edge momentum rankings, even as the spot price of gold cools from its earlier surge. This divergence highlights a split market where bullion's immediate panic bid has faded, but specific mining equities continue to gain traction.

Momentum Scores and Stock Performance

Benzinga Edge Stock Rankings indicate significant movement in the momentum scores of these miners. SSR Mining saw its score rise from 86.13 to 92.66, pushing it deeper into top-tier momentum territory. The stock has surged 40.02% year-to-date and 141.13% over the year, though it was down 3.32% in premarket trading on Tuesday. Centerra Gold also advanced, moving from 86.13 to 89.14, with a 133.665% gain over the year and a 14.49% rise year-to-date. Eldorado Gold posted the sharpest improvement in the group, jumping from 20.67 to 58.72, despite being down 10.41% year-to-date.

Gold Price Dynamics and Analyst Views

The rally in miners occurs as analysts debate the sustainability of gold's recent highs. Rick Kanda, managing director at The Gold Bullion Company, noted that gold peaked at $5,500 per ounce in early 2026 before falling back toward $4,300. He suggested that while a $6,000 per ounce forecast may be out of reach, sustained central bank buying could help gold reach the $5,000 mark. As of publication, Gold Spot US Dollar fell 1.45% to trade around $4,130.74 per ounce, significantly below its last record high of $5,595.46 per ounce. The SPDR Gold Trust (GLD) was also down 1.43% at $379.08 in premarket trading.

Long-Term Support for Gold

Despite the recent consolidation, the long-term thesis for gold remains intact. Sprott indicated that the current price pullback "does not change the thesis," citing inflation, central bank buying, and currency debasement as continuing supports. Data from The Gold Bullion Company shows the United States remains the world's largest gold holder, possessing 8,133.5 tonnes valued at roughly $897.3 billion. For investors, the market presents a contrast between cooling bullion prices and mining stocks that are still climbing the momentum board.