Gold Drops 1.8%, Nasdaq Futures Plunge 2% as Inflation, Tech Woes Bite

Markets retreated Tuesday as rising inflation concerns and mounting skepticism over the artificial intelligence trade overshadowed early optimism from US-Iran peace negotiations.

Gold fell as much as 1.8% to near $4,115 an ounce, erasing modest gains from the previous session. The decline came as Federal Reserve officials signaled rates may stay higher for longer, with Chicago Fed President Austan Goolsbee warning inflation is “well above target and going the wrong way.” New Fed Chair Kevin Warsh’s hawkish stance has pushed the dollar up more than 1% since the central bank’s last meeting, further pressuring the precious metal.

Gold has now lost over 20% since the Middle East conflict began in February. Deutsche Bank slashed its price forecast to $4,300 for Q3 and $4,800 for Q4, while Goldman Sachs cut its year-end target by $500 to $4,900, now expecting zero rate cuts this year. Traders are now focused on Thursday’s PCE inflation report, the Fed’s preferred gauge.

On Wall Street, the pain was even sharper. US stock futures tumbled, with the Nasdaq 100 plunging 2.1% and the S&P 500 dropping 1.2%. Big Tech led the selloff as investors questioned the sustainability of the AI boom. SpaceX fell for a third straight day, erasing another 16% and extending its post-IPO slide to nearly 24%. Alphabet dropped 5% on AI leadership exits, while Amazon, Meta, and Microsoft all lost ground.

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Chip stocks offered a rare bright spot—Micron jumped 7% ahead of Wednesday’s earnings, while AMD and Intel also gained. But broader sentiment remained fragile, with Kevin Gordon of Schwab noting that software prices have accelerated at a “59% annualized pace,” challenging the view that AI is automatically deflationary.

Oil prices steadied after Monday’s 3% drop, as a 60-day US waiver allowing Iranian crude and fuel sales signaled progress in peace negotiations. VP JD Vance called the talks “very, very good,” though Iran disputed claims of new nuclear commitments and warned the Strait of Hormuz “will never return to its previous state.”

The 10-year Treasury yield climbed to around 4.51% as investors braced for higher rates, while the 2-year yield hit its highest since February 2025. All eyes now turn to Thursday’s PCE data and Micron’s earnings on Wednesday for clues on whether the Fed’s hawkish pivot—and the AI trade’s resilience—can withstand further scrutiny.

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