Dollar's Rise Dents Gold Prices Amid Higher Rate Expectations
Gold prices have dropped amid a stronger dollar and expectations of further interest rate increases from the Federal Reserve. As of 04:53 ET on Wednesday, gold was trading at $4,318.05 an ounce, down 0.9% from the previous day. The US Dollar Index (DXY) rose 0.1% to 100.71, its highest level since July 30.
The stronger dollar makes gold more expensive for overseas buyers, according to David Morrison, Senior Market Analyst at Trade Nation. 'The greenback has become the ‘go to’ haven for investors in times of uncertainty,' he said.
Fed Chair Kevin Warsh signalled that further interest rate increases could be needed to combat persistent inflation. St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee have also pointed to additional rate hikes to contain inflation.