Gold prices fell to a new six-month low on Thursday, pressured by Middle East tensions, rising market expectations for interest rate hikes, and the impending large-scale IPO of SpaceX.

In early trading Thursday, the price of gold dropped more than 1% to $4,022 per troy ounce, marking its lowest level since late November of last year and setting up the potential for its worst quarterly performance in nearly a decade. The price later recovered slightly, trading around $4,091.

Since the outbreak of the Middle East conflict, gold has fallen by more than 20%. Some central banks have been forced to sell gold to stabilize their currencies, while the speculative capital that had aggressively accumulated the metal earlier is now exiting—the same capital that fueled a wave of gold buying from late last year into early this year.

Peter Kinsella, Head of Investment Services at Union Bancaire Privée, stated, "Following the conflict in Iran, there has been a broad-based reduction of risk exposure in portfolios. Investors are selling gold to cover margin calls on other losing assets; any de-risking operation leads to gold sales."

In recent months, several central banks have had to reduce their gold holdings: Turkey sold and swapped gold worth $20 billion to support its currency, while Russia also sold gold to bolster its fiscal funds.

During the conflict, expectations for U.S. interest rate hikes have continued to rise, enhancing the appeal of government bonds like U.S. Treasuries and becoming a core factor suppressing gold prices.

Surging oil prices have increased inflationary pressures, leading to a complete reversal in market expectations: traders, who had previously anticipated two to three 25-basis-point rate cuts by the Federal Reserve by year-end, are now forecasting a 25-basis-point rate hike instead. Since gold itself does not generate interest income, rate hikes directly increase the opportunity cost of holding it.

Tom Price, an analyst at Panmure Liberum, noted that Friday's massive SpaceX IPO could further pressure gold prices, with AI companies like Anso and OpenAI also preparing for listings.

"This creates a potential drag on gold as capital flows towards new, hot sectors in pursuit of returns. Gold is weak right now, and everyone is looking for the next big thing, with SpaceX being the biggest current story," he said.

Mohit Kumar, an analyst at Jefferies, believes this series of mega-IPOs could divert market liquidity in the short term, putting downward pressure on the prices of both gold and crypto assets.

Previously, a massive influx of retail investors into the gold and silver markets helped drive a historic bull run, with prices doubling over two years at their peak. However, retail sentiment has now completely reversed, with persistent outflows from gold ETFs exacerbating the sell-off.

Data from the World Gold Council shows net outflows of 55 tonnes from gold ETFs from March to May, ending a nine-month streak of net inflows.

A recent report from the European Central Bank indicates that global central banks as a whole continue to be net buyers of gold; by the end of last year, the total value of gold holdings surpassed that of U.S. Treasuries to become the world's largest reserve asset by value.