Gold prices fell on Wednesday, nearing a two-week low as the US dollar strengthened and anticipation of increased interest rates dampened investor appetite. Spot gold dropped approximately 1.1% to $4,067.72 per ounce after hitting an intraday low of $4,050.60. Similarly, US gold futures saw a decline.
This downturn continues a trend of weakening in the gold market, with prices having fallen in five out of the last six trading sessions and marking a third straight week of losses. The $4,000 per ounce level is being monitored closely by investors as a critical support threshold.
The rally in the US dollar, which reached its highest point in over a year, is a significant driver behind the drop in gold prices. A stronger dollar makes gold more costly for those purchasing with other currencies, thereby diminishing demand for the precious metal.
Additionally, expectations of potential Federal Reserve interest rate hikes have added pressure on gold prices. Since gold does not yield interest income, higher rates can make alternative investments more appealing, decreasing the allure of gold as a safe-haven asset.
Market participants are now focused on the upcoming US PCE inflation report, which could impact the Federal Reserve’s interest rate strategy. Meanwhile, reduced concerns over energy disruptions in the Middle East have also lessened the demand for gold as a defensive investment. In contrast, silver prices rebounded after recent declines, rising about 0.8% to $61.12 per ounce, though gold prices remain under pressure amid shifting market expectations.