Hawkish Fed and Strong Dollar Pressure Gold Prices

Gold prices faced downward pressure as a hawkish monetary policy stance from the US Federal Reserve bolstered the US Dollar to a one-year high. While the Fed held rates steady, signals of potential future hikes created significant headwinds for the non-yielding precious metal. Easing geopolitical tensions, highlighted by a US-Iran peace deal and the reopening of the Strait of Hormuz, also appeared to reduce safe-haven demand.

UK Economic Concerns Weigh on Sterling

The British Pound Sterling weakened even as the Bank of England delivered a hawkish hold on interest rates, with a second policymaker voting for a rate increase. The currency's slide was attributed to underlying economic weakness, including a GfK survey showing subdued consumer confidence amid expectations of tougher times ahead. The decline in crude oil prices also complicated the inflation outlook, weighing on the pound.

Mixed Inflation Data from Japan

Japan's latest inflation data presented a mixed picture for the Bank of Japan (BOJ). While the national Consumer Price Index (CPI) rose 1.5% year-over-year in May, the core inflation rate, a key metric for the central bank, remained below its target. This outcome suggests the BOJ may continue to maintain its current policy stance.

Strong Foreign Demand for US Assets

The United States continued to attract significant foreign investment, with data for April showing that foreigners purchased $103 billion of US securities. A net inflow was also reported by the Treasury International Capital (TIC) system for the month. This strong demand for US assets helps underpin the strength of the US Dollar in global markets.