Gold Futures Close Lower As Hawkish Fed Lifts US Dollar

By K. Naveen Prabu

KUALA LUMPUR, June 18 (Bernama) -- Gold futures on Bursa Malaysia Derivatives closed lower on Thursday as a hawkish outlook by the United States Federal Reserve (Fed) boosted the US dollar and weighed on demand for the precious metal.

SPI Asset Management managing partner Stephen Innes said the market underwent a sharp hawkish repricing following the latest Federal Open Market Committee (FOMC) meeting as the Fed signalled that a rate hike remained a possibility.

“That was enough to lift the US dollar and push gold sharply lower in the immediate aftermath of the meeting,” he told Bernama. 

Innes said gold managed to recover some ground during Asian trading following the signing of a memorandum of understanding (MOU) between the US and Iran.

However, he said the rebound appeared to be driven more by easing US Treasury yields than by renewed geopolitical concerns.

“As US Treasury yields drifted lower, gold found some breathing room and staged a modest rebound from its post-FOMC lows,” he said.

The recovery, nevertheless, faded during the London session as traders shifted their focus back to the Fed and the prospect of a more restrictive monetary policy path, Innes said.

“The market is increasingly interpreting the FOMC as a more hawkish central bank that is not merely on hold, but is keeping the door open to further tightening should inflation prove sticky,” he said. 

Innes said a stronger US dollar and higher Treasury yields posed a challenging environment for gold, as they increased the opportunity cost of holding a non-yielding asset.

“The key now is whether yields can settle back after the initial policy shock, allowing gold to stabilise, or whether the market will continue to price in a more restrictive Fed path into the second half of the year,” he said.

At the close, the spot-month June 2026 contract decreased to US$4,275.20 per troy ounce from US$4,351.30 at Tuesday's close, while the July 2026 contract went down to US$4,287.20 per troy ounce from US$4,363.30. The August 2026 contract declined to US$4,307.80 per troy ounce from US$4,383.20

The September 2026 contract was US$4,312.30 per troy ounce, while the October 2026 and December 2026 contracts were both pegged at US$4,331.40 per troy ounce.

Trading volume increased to five lots from four on Tuesday, while open interest was up to 69 contracts from 67 previously.

Meanwhile, physical gold was fixed at US$4,341.85 per troy ounce at the London Bullion Market Association afternoon fix on June 17, 2026.

-- BERNAMA