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Gold falls despite high inflation in the US, experts explain the reasons

2026-06-24 08:01:00, Kosova & Bota CNA

Gold falls despite high inflation in the US, experts explain the reasons

Gold is heading for a fourth straight month of declines, despite U.S. inflation hitting a three-year high. The development has challenged the widespread belief that the precious metal is always a safe haven against rising prices.

Analysts explain that the main reason for gold's weakness is not inflation, but expectations of higher interest rates from the US Federal Reserve. Unlike bonds or stocks, gold does not generate income in the form of interest or dividends, making it less attractive when investors can secure higher returns from other assets.

At the same time, the US economy continues to show strength, with corporate profits rising sharply. According to the data, earnings per share of companies in the S&P 500 index rose by 25 percent in the first quarter of 2026 compared to a year earlier.

Rising inflation, driven by energy costs and the effects of trade tariffs, has prompted central banks to tighten monetary policy. Markets now expect the Federal Reserve to raise interest rates further in the coming months.

This change in expectations has directly impacted the gold market. Investment bank Goldman Sachs has lowered its forecast for the price of gold through the end of 2026, while analysts at Bank of America estimate that tighter monetary policy will limit the precious metal's growth potential.

Experts point out that gold tends to perform better when inflation is high and interest rates remain low, as the cost of holding it falls. Conversely, when central banks respond to inflation by raising rates, investors often gravitate toward bonds and other financial instruments that offer higher returns.

According to analysts, the idea that gold is always an automatic hedge against inflation comes largely from the experience of the 1970s, when real interest rates were negative and investors sought refuge from uncontrolled price increases. In the current conditions, with a relatively strong economy and more aggressive monetary policy, gold is facing continued pressure in the markets./ CNA





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