Gold prices dropped on Wednesday, nearing a two-week low as a stronger US dollar and anticipated interest rate hikes put pressure on investor demand. Spot gold decreased by approximately 1.1% to $4,067.72 per ounce, after hitting an intraday low of $4,050.60. US gold futures also experienced a decline.
This downturn highlights ongoing weakness in the gold market, with prices falling in five of the past six trading sessions and marking a third consecutive weekly loss. Investors are closely monitoring the $4,000 per ounce level, viewing it as a crucial support point.
A key factor contributing to the decline has been the strengthening US dollar, which recently reached its highest level in over a year. A stronger dollar makes gold more costly for international buyers using other currencies, thus diminishing demand for the metal.
The possibility of Federal Reserve rate increases is also impacting gold prices. Since gold does not yield interest income, higher rates tend to make other investments more appealing, thereby reducing the demand for gold as a safe-haven asset. Investors are now turning their attention to the upcoming US PCE inflation report, which could affect the Federal Reserve’s forthcoming interest-rate decisions.
In contrast, silver prices saw an uptick following recent declines, gaining about 0.8% to reach $61.12 per ounce. Meanwhile, gold continues to face downward pressure amid shifting market expectations and easing concerns over potential Middle East energy disruptions, which have lessened the demand for gold as a defensive investment.