Dollar Strength Weighs on Gold as Fed Rate Hike Expectations Rise

Gold prices are down for the week due to a stronger US dollar and expectations of higher interest rates from the Federal Reserve. Spot gold fell 0.1% to $4,274.90 per ounce by 0632 GMT, while US gold futures edged 0.3% higher to $4,310.30.

The US dollar is on track for a weekly gain, making greenback-priced metals more expensive for holders of other currencies. This has weakened demand for gold and other precious metals, causing prices to drop.

'Focus will definitely continue to be on the interest rate situation,' said Kelvin Wong, senior market analyst at OANDA. 'When we start to see markets pricing in a much more hawkish Fed, it strengthens the dollar and is negative for gold.'

The Federal Reserve's hawkish stance is driving up expectations of higher interest rates, with a nearly 71% probability of a US rate hike in October, according to CME's FedWatch Tool.