Gold prices continued their downward trend on Wednesday, nearing a two-week low as the US dollar’s strength and the prospect of rising interest rates dampened investor interest. Spot gold dropped approximately 1.1% to $4,067.72 per ounce, after reaching an intraday low of $4,050.60. In parallel, US gold futures experienced a similar decline.
This slump in gold prices is part of an ongoing pattern, with the market seeing declines in five of the past six trading sessions, marking three consecutive weeks of losses. Investors are now focusing on the $4,000 per ounce threshold as a crucial support level that could influence future market movements.
The US dollar’s rise, reaching its highest point in over a year, is a significant factor behind the reduced demand for gold. A stronger dollar renders gold more costly for buyers using other currencies, thereby diminishing its appeal. Additionally, the market’s anticipation of potential interest rate hikes by the Federal Reserve has put further pressure on gold. Since gold yields no interest, higher rates can make alternative investments more attractive, detracting from gold’s allure as a safe-haven asset.
As investors await the upcoming US PCE inflation report, which could impact the Federal Reserve’s rate decisions, the outlook for gold remains uncertain. Meanwhile, decreased concerns over energy disruptions in the Middle East have also lessened the demand for gold as a defensive investment. While gold struggles, silver prices have seen a modest recovery, rising around 0.8% to $61.12 per ounce after recent losses.