Gold prices slid to a six-month low of $4,022 per troy ounce on Thursday, down more than 1 per cent, as Middle East tensions and rising US interest rate expectations pressured the precious metal. The decline puts gold on track for its worst quarterly performance in nearly ten years, with prices later recovering slightly to $4,091.

The sell-off accelerated after the war in the Middle East began, forcing central banks to liquidate gold holdings to defend currencies. Turkey swapped $20bn in gold while Russia sold reserves to support fiscal accounts. Speculative investors who drove the late 2023-2024 bullion rally have exited en masse, with Peter Kinsella of UBP noting investors are selling gold to fund other margin positions.

Rising Treasury yields have reduced gold's appeal as investors pivot from expecting multiple rate cuts to anticipating a one-quarter point rate increase this year. The opportunity cost of holding an income-less asset has climbed sharply. Upcoming mega-listings like SpaceX's IPO and planned offerings from Anthropic and OpenAI are drawing capital away from precious metals.

ETF outflows totaling 55 tonnes between March and May erased nine months of steady inflows, confirming the retail investor reversal. While central banks remain net buyers globally, the immediate liquidity drain from competing investment opportunities continues pressuring gold prices lower.