Sharp Drop in International Oil and Gold Prices

June 10, 2026 – Gold prices breach key level: International gold prices continued to slide; spot gold fell below $4,200 per ounce to trade around $4,174, marking a decline of over 20% from its yearly high.

Oil prices experience extreme volatility: Crude oil futures plunged more than 5% at one point but rebounded following news of the conflict; ultimately, oil prices in New York and London closed at $88.20 and $91.45 per barrel, respectively.

Key Drivers: Middle East Conflict and Rate Hike Expectations
Behind this sharp decline lies the interplay and reversal of two major forces: geopolitics and monetary policy.

Geopolitical Risk Unexpectedly Becomes a Bearish Factor
Geopolitical conflicts, which typically drive up the prices of safe-haven assets, acted as the trigger for the decline this time:

The Event: On June 9, Iran shot down a U.S. military helicopter, and the U.S. subsequently struck targets within Iran, causing the situation to escalate abruptly.

Market Reversal: Following news of the conflict, the market initially engaged in panic selling, causing both oil and gold prices to fall in tandem. The market feared that the conflict would fuel inflation, forcing the Federal Reserve to further tighten policy.

Expectations of Monetary Tightening Act as the Primary Drag
The true driver behind this sharp decline is the market's strong expectation regarding a shift in Federal Reserve policy:

Strong Employment Data: U.S. non-farm payroll data for May was stronger than expected, completely reversing market expectations for Fed rate cuts and even leading the market to price in potential rate hikes later in the year.

Surge in the Dollar and Interest Rates: Expectations of rate hikes pushed the U.S. Dollar Index toward the 100 mark, while the 10-year U.S. Treasury yield climbed above 4.5%, directly weighing on gold—a non-interest-bearing asset denominated in U.S. dollars.