Gold prices took a hit on Wednesday, nearing a two-week low as the US dollar’s strength and expectations of rising interest rates dampened investor interest. Spot gold dropped by about 1.1% to $4,067.72 per ounce, touching an intraday bottom of $4,050.60. US gold futures likewise experienced a decline.
The persistent downward trend in the gold market is evident, with prices falling in five of the last six trading sessions and marking a third consecutive week of losses. Investors are paying close attention to the $4,000 per ounce mark, which is seen as a critical support level for gold prices.
A key driver of this downturn is the US dollar’s ascent to its highest level in over a year. A stronger dollar tends to make gold more expensive for those purchasing with other currencies, which in turn diminishes demand for the precious metal.
Anticipation of possible interest rate hikes by the Federal Reserve is also putting pressure on gold prices. As gold does not yield interest, higher interest rates can make other investment avenues more appealing, thereby reducing the attractiveness of gold as a safe-haven asset.
Investors are now turning their attention to the forthcoming US PCE inflation report, which could sway the Federal Reserve’s future interest rate decisions. Meanwhile, a reduction in concerns over potential Middle East energy disruptions has also lessened some of the demand for gold as a defensive investment. In contrast, silver prices rebounded from recent losses, rising about 0.8% to $61.12 per ounce, even as gold remained under duress amid shifting market expectations.