Gold Falls Amid Fed Hike as China's Gold Demand Surges

Gold prices fell on Tuesday as the Federal Reserve's interest rate hike put pressure on the precious metal. Spot gold declined by 0.6% to $4,329.31 per ounce at 0623 GMT on September 23. The dollar held near a two-month high, making bullion more expensive for buyers outside the US.

Silver, platinum, and palladium also lost value, with each metal declining by over 1%. Despite this decline in gold prices, China's physical demand remains strong. In the eight months to August, China imported over 1,000 tonnes of gold worth $158.8 billion, according to a report from the Financial Times.

The Federal Reserve's interest rate hike has put pressure on gold prices, but US business activity continues to boom. The country's Composite PMI Output Index rose to 58.4 in September, its fastest expansion since July 2021. This growth was driven by the service sector, which reported a steep rise in output for over five years.

The US Composite PMI Output Index and Flash Services PMI Business Activity Index both reached multi-month highs, indicating strong growth. However, input costs jumped to their highest level since 2022, driven by higher energy and transport costs, adding to inflation concerns.