Gold prices edged lower on Wednesday, nearing a two-week low, as a robust US dollar and expectations of rising interest rates dampened investor enthusiasm. Spot gold decreased by approximately 1.1%, settling at $4,067.72 per ounce after hitting an intraday low of $4,050.60. US gold futures mirrored this downward trend.
This downturn extends a period of weakness for the gold market, with prices dropping in five of the last six trading sessions and marking a third straight weekly decline. Market watchers are keeping a close eye on the $4,000 per ounce threshold, which is seen as a critical support level.
The recent appreciation of the US dollar, which has climbed to its highest point in over a year, is a major factor contributing to the decline in gold prices. As a stronger dollar makes gold more costly for those using other currencies, demand for the precious metal has diminished.
Additionally, the prospect of potential interest rate hikes by the Federal Reserve has exerted further pressure on gold. With gold not offering interest income, higher rates can make alternative investments more appealing, thereby reducing demand for this traditional safe-haven asset.
Investors are now turning their attention to the upcoming US PCE inflation report, which is likely to influence the Federal Reserve’s future interest rate decisions. Meanwhile, reduced concerns over energy disruptions in the Middle East have also lessened the demand for gold as a defensive investment. In contrast, silver prices rebounded following recent losses, rising about 0.8% to $61.12 per ounce, even as gold continues to face market pressures.