Gold prices fell sharply Tuesday, dropping towards the $5,000 an ounce level.
Spot gold declined 6% to nearly $5,018 an ounce. This reversed a one-month high above $5,400 an ounce from the previous session. Gold futures dropped more than 4%. Silver plunged almost 12% to under $80 an ounce.
A stronger US dollar and prospects of higher interest rates weighed on the metal. The dollar rose above a one-month peak. This makes dollar-priced bullion more expensive for other currency holders.
Middle East tensions also decreased chances of a Federal Reserve rate cut. Conflict in the region has caused energy prices to spike. This could keep inflation elevated, reducing the likelihood of rate cuts.
Despite the recent decline, gold remains up more than 17% for the year. Silver also holds similar yearly gains. Major banks like BNP and JPMorgan forecast gold prices to rally beyond $6,000 by year-end.