Gold prices extended losses on Thursday, hovering near their lowest levels in more than seven months, as a resurgent U.S. dollar and growing expectations of further Federal Reserve tightening eroded demand for the non-yielding metal.

Spot gold slipped 0.5% to $3,978.60 an ounce by 02:25 ET (06:25 GMT), while U.S. Gold Futures edged 0.4% lower to $3,993.80.

Gold tumbled below the key $4,000-per-ounce mark on Wednesday for the first time since November 2025.

The precious metal has now lost nearly 30% from its January record high of $5,595.46 an ounce.

The decline came as the dollar remained pinned at a 13-month high after six straight sessions of gains, supported by increasing bets that the Fed may raise interest rates later this year.

Markets are pricing in a roughly one-third chance of a July rate hike and a 66% probability of tightening by September, according to CME FedWatch.

A stronger greenback makes dollar-denominated gold more expensive for overseas buyers, while higher interest rates raise the opportunity cost of holding bullion, which does not offer yields.

"Gold’s weakness highlights the extent to which markets have shifted their focus from safe-haven demand towards the implications of higher interest rates and tighter financial conditions," ING analysts said in a recent note.

The latest slide also reflects a broader reassessment of safe-haven demand. Easing geopolitical concerns after progress in U.S.-Iran peace efforts and lower oil prices have reduced some of the risk premium that supported gold earlier this year.

Traders await U.S. Personal Consumption Expenditures (PCE) data, the Fed’s preferred inflation gauge, for further clues on the policy outlook. 

Among other precious metals, silver prices fell 0.6% to $57.10 per ounce, after dropping more than 6% in the previous session.

"While the silver market is expected to remain in deficit, some of the strongest demand drivers are becoming less supportive," ING analysts added.

Platinum prices slipped 1.6% to $1,559.60/oz, after sliding 4.5% on Wednesday.

Benchmark Copper Futures on the London Metal Exchange edged up 0.6% to $13,112.95 a ton, while U.S.Copper Futures traded flat at $5.97 a pound.