Gold sell-off forces big banks to cut forecasts

Gold prices have tumbled to around $4,000 an ounce, extending a sharp sell-off that has pushed major banks to scale back once-bullish forecasts. The reversal follows a two-year rally that saw spot gold more than double from around $2,000 at the start of 2024 to an intraday record near $5,600 in late January; spot gold was trading around $4,025 a troy ounce early Friday, roughly 30% below that high and lower for the year.

A firmer US dollar and rising expectations that the Federal Reserve will keep interest rates higher for longer — or even raise them — have sapped demand for non-yielding bullion. "The sell-off may appear surprising given ongoing geopolitical uncertainty and continued central bank buying.

However, gold's weakness highlights the extent to which markets have shifted their focus from safe-haven demand towards the implications of higher interest rates and tighter financial conditions," wrote Ewa Manthey, a commodity strategist at ING. Investment demand has also softened.

United States

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