Gold prices experienced a decline on Wednesday, nearing a two-week low as the US dollar strengthened and expectations of higher interest rates dampened investor interest. Spot gold dropped by approximately 1.1% to $4,067.72 per ounce, after hitting an intraday low of $4,050.60. Similarly, US gold futures saw a downward trend.
This downturn reflects ongoing challenges in the gold market, with prices decreasing in five out of the last six trading sessions and marking a third consecutive week of losses. The $4,000 per ounce threshold is being closely monitored by investors as a critical support level.
A key driver of the price drop is the rise in the US dollar, which has climbed to its highest level in over a year. A stronger dollar tends to make gold more costly for buyers using other currencies, thereby diminishing demand for the precious metal.
Additionally, the anticipation of potential interest rate hikes by the Federal Reserve has exerted pressure on gold prices. Since gold does not yield interest, higher rates often make other investment options more appealing, reducing the allure of gold as a safe-haven asset.
Investors are now turning their attention to the upcoming US PCE inflation report, which could impact the Federal Reserve’s decisions regarding interest rates. Meanwhile, waning concerns about energy supply disruptions in the Middle East have further softened the demand for gold as a defensive investment. In contrast, silver prices rebounded following recent declines, gaining around 0.8% to reach $61.12 per ounce.