Gold prices fell on Wednesday, nearing a two-week low as the US dollar strengthened and investors anticipated higher interest rates. Spot gold dropped by about 1.1% to $4,067.72 per ounce, after hitting an intraday low of $4,050.60. US gold futures experienced a similar decline, continuing a trend of weakness in the gold market.
This latest drop marks a continuation of gold’s struggle, with prices declining in five of the last six trading sessions and marking a third consecutive week of losses. Investors are keeping a close eye on the $4,000 per ounce level, considered a significant support point for gold prices.
The recent rise in the US dollar, which has reached its highest level in over a year, is a primary factor contributing to the decrease in gold prices. A stronger dollar makes gold more costly for those using other currencies, thus dampening demand for the precious metal.
Additionally, market expectations of potential Federal Reserve interest rate hikes have added pressure to gold prices. As gold does not offer interest income, higher rates can make other investments more appealing, reducing the demand for this traditional safe-haven asset.
Investors are now turning their attention to the upcoming US PCE inflation report, which could sway the Federal Reserve’s future decisions on interest rates. Meanwhile, diminishing concerns over potential energy disruptions in the Middle East have also lessened demand for gold as a defensive investment. In contrast, silver prices saw a modest increase, rising approximately 0.8% to $61.12 per ounce, following recent losses.