Gold prices fell to a six-month low on Thursday, pressured by a combination of factors including Middle East tensions, heightened market expectations for U.S. interest rate hikes, and the upcoming initial public offering of SpaceX.

In early Thursday trading, the price of gold dropped over 1%, touching $4,022 per troy ounce, marking its lowest level since late November of last year. The quarter is also on track for its worst performance in nearly a decade. The price later recovered slightly, trading at $4,091 intraday.

Since the outbreak of conflict in the Middle East, gold has fallen by more than 20%. Some central banks have been forced to sell gold to stabilize their domestic currencies, while speculative funds that fueled a buying frenzy from late last year into early this year have now exited the market.

Peter Kinsella, Head of Investment Services at Union Bancaire Privée, stated, "After the escalation in Iran, investors began reducing risk exposure in their portfolios. Many are selling gold, often purchased on margin, to raise funds for other underperforming assets. Any de-risking operation typically involves selling gold."

In recent months, several central banks have been compelled to reduce their gold holdings. Notably, Turkey has utilized its gold reserves, worth a cumulative $20 billion, through sales and swaps to defend its currency. Russia has also sold gold to replenish state finances.

During the war, rising expectations for U.S. interest rate hikes have been a primary factor weighing on gold prices, as they enhance the relative attractiveness of U.S. Treasuries and other sovereign bonds.

Surging oil prices have pushed inflation higher, leading to a complete shift in market traders' expectations. Previously anticipating two to three 25-basis-point rate cuts by the Federal Reserve this year, they now forecast a 25-basis-point rate hike before year-end. As a non-yielding asset, higher rate expectations increase the opportunity cost of holding gold.

Tom Price, an analyst at Panmure Liberum, noted that SpaceX's large-scale IPO launch on Friday could further pressure gold prices. Two artificial intelligence firms, Anthropic and OpenAI, are also preparing for listings.

He said, "This creates potential downward pressure on gold as investors chase returns in other sectors. Gold is currently weak, with market attention focused on new, hot assets, and SpaceX is the center of that attention right now."

Mohit Kumar, an analyst at Jefferies, believes that a series of large IPOs could divert market liquidity in the short term, thereby putting pressure on the prices of gold and crypto assets.

Previously, a massive influx of retail investors into the gold and silver markets drove a historic bull run, doubling the gold price within two years. However, the retail sentiment has now reversed, with persistent outflows from gold ETFs exacerbating the sell-off.

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

A recent report from the European Central Bank pointed out that, on a global scale, central banks remain net buyers of gold. By the end of last year, the market value of gold holdings surpassed that of U.S. Treasury securities, becoming the world's largest reserve asset.