Gold prices continued to fall on Wednesday and stayed close to a two-week low. Spot gold was down 1.1% at $4,067.72 per ounce after touching an intraday low of $4,050.60. U.S. Gold Futures also fell. Futures dropped 1.6% to $4,083.60 per ounce. Gold is now trading just above the important $4,000 per ounce level, which many investors are watching closely.
Gold has fallen in five of the last six trading sessions, showing continued weakness in prices, according to Yahoo Finance. Gold has also recorded three straight weekly losses. One of the main reasons gold prices are falling is the stronger U.S. dollar. The U.S. Dollar Index (DXY) has risen to its highest level in 13 months.
When the dollar becomes stronger, gold becomes more expensive for people using other currencies. This usually reduces demand for gold. Investors also believe that the U.S. Federal Reserve may raise interest rates again in the coming months. Higher interest rates are usually bad for gold because gold does not earn any interest, making other investments more attractive.
Gold price fall
Markets are currently pricing in around a 70% chance of a Fed rate hike by September. Investors are also fully expecting another rate increase by December, according to Yahoo Finance. ING analysts said a stronger U.S. dollar and expectations that interest rates could stay higher for longer outweighed gold’s safe-haven appeal.
Fed rate outlook
Gold also faced pressure because concerns about energy supply disruptions in the Middle East have eased. Investors are closely watching talks between the United States and Iran after both sides said they are making progress toward a wider peace agreement. The discussions are focused on improving oil and energy shipments through the Strait of Hormuz, one of the world’s busiest and most important routes for transporting oil. However, some major issues are still unresolved, including rules for nuclear inspections and Iran’s access to frozen assets held abroad.
Middle East talks
Analysts said geopolitical tensions remain high, but gold prices are now being influenced more by expectations about the U.S. Federal Reserve’s interest-rate plans, according to Yahoo Finance. Investors are also waiting for the U.S. Personal Consumption Expenditures (PCE) inflation report, which is scheduled to be released on Thursday. The report is closely watched because it could give important signals about the Federal Reserve’s next move on interest rates, which can affect gold prices and financial markets.
Gold price levels
Gold prices are now 26.14% lower than their 52-week high, but still 23.83% higher than their 52-week low. A week ago, gold was trading at $4,338.54 per ounce. Since then, prices have dropped by 6.74%. A month ago, gold was trading at $4,572.66 per ounce. Since then, prices have fallen by 11.51%. Among other precious metals, silver gained 0.8% to $61.12 per ounce after dropping more than 5% in the previous trading session.
