Gold prices experienced a decline on Wednesday, nearing a two-week low as the US dollar strengthened and investor concerns over rising interest rates intensified. Spot gold dropped around 1.1% to $4,067.72 per ounce, after hitting an intraday low of $4,050.60. Similarly, US gold futures saw a downturn, reflecting ongoing market weakness.
This drop continues a trend of softness in the gold market, with prices decreasing in five out of the last six trading sessions and marking a third consecutive weekly loss. Investors are paying close attention to the $4,000 per ounce mark, which is viewed as a critical support level for the market.
The recent rise of the US dollar, reaching its peak in more than a year, has been a significant factor in the decline of gold prices. A stronger dollar tends to make gold more costly for international buyers using other currencies, leading to reduced demand for the precious metal.
Anticipation of potential interest rate hikes by the Federal Reserve has also put pressure on gold prices. Since gold does not offer interest income, higher rates can make other investments more appealing, thereby decreasing the demand for this traditional safe-haven asset.
Traders are now looking ahead to the upcoming US PCE inflation report, which could have implications for the Federal Reserve’s interest rate strategies. Meanwhile, the easing of concerns about disruptions in Middle East energy supplies has also lessened some of the demand for gold as a defensive investment. In contrast, silver prices saw an uptick, rising about 0.8% to $61.12 per ounce, as gold remained under market pressure.