Fed Hawkishness Sinks Gold Prices Amid Dollar Strength
Gold prices fell on Wednesday as hawkish comments from US Federal Reserve officials reinforced expectations of tighter monetary policy. Spot gold dropped 0.9% to $4,316.59 per ounce, while US gold futures for December delivery declined 0.5% to $4,353.30.
The stronger dollar made greenback-priced bullion more expensive for holders of other currencies. Richmond Fed President Tom Barkin said that rate hikes and the threat of more could temper business inflation expectations without slowing down economic activity.
Despite gold's reputation as a hedge against inflation, rising interest rates reduce its attractiveness as investors seek higher-yielding assets. Traders are pricing in a 53% chance of a rate hike in October, according to the CME FedWatch Tool.