Gold just lost its grip on the $4,000 level. Spot prices slipped below that psychologically important threshold on June 24 for the first time since November 2025, pushed down by a US dollar flexing at 13-month highs and a Federal Reserve that clearly isn’t done tightening.

The decline amounts to more than 3% since the Fed’s most recent policy meeting. Gold started the week trading around $4,090 to $4,121 before the selloff accelerated.

What’s driving the drop

Two forces are squeezing gold right now, and they’re working in tandem.

First, the dollar. The US dollar index surged to levels not seen in over a year, making gold more expensive for holders of other currencies.

Second, the Fed’s hawkish posture. Recent commentary from policymakers has shifted expectations firmly toward additional rate hikes. That’s a problem for gold because the metal doesn’t pay interest, dividends, or anything else. When interest rates rise, the opportunity cost of holding gold increases. Investors start looking at Treasury yields, money market funds, and other instruments that actually generate income.

Reduced geopolitical risk premiums, particularly related to US-Iran tensions, have taken some of the fear trade off the table.

The bigger picture is uglier

Gold has declined by more than 23% since February, according to some estimates. That’s not a dip. That’s a correction with conviction.

Analysts are watching the $3,900 level as the next meaningful support. If gold holds there, it could signal that the selling pressure is exhausting itself.

One structural factor that could provide a floor: central bank purchases. Sovereign buyers have been accumulating gold at an elevated pace over the past couple of years, driven by diversification away from dollar-denominated reserves. That buying hasn’t stopped, even as spot prices have fallen.

What this means for investors

When the Fed signals it’s willing to keep hiking, it reshapes the entire investment landscape. Non-yielding assets lose their relative appeal. Investors who loaded up on bullion as an inflation hedge earlier this year are now facing a different calculus: the hedge itself is losing value faster than the thing it was supposed to protect against.

The 3% drop since the Fed meeting came quickly, and momentum sellers and algorithmic strategies can amplify downside pressure once key levels break.

What investors should be watching: the next Fed meeting for concrete policy guidance, the dollar index for signs of exhaustion, and the $3,900 support level for evidence that institutional buyers are stepping in.