Gold Price Plummets as Safe-Haven Status Fades Amid Rising Interest Rates

The XAU/USD price has been falling, trading near $4,020 after shedding roughly 1.4% in value. This decline occurred despite a global equity shock that should have boosted demand for gold as a safe-haven asset.

The damage was concentrated in Asia, where Korean shares fell almost 11%, and the Nikkei 225 gave up close to 4%. The regional benchmark fell 3% due to renewed scepticism about returns on artificial intelligence spending. Money moved into safety and government bonds rather than gold.

The US Dollar Index sits near a one-month high of 101.50, and the Dollar trades just short of 164.00 against the Yen. Treasury yields eased in response to the equity move, which should have supported an asset that pays no coupon, but gold fell anyway. This suggests the bid for protection is being expressed through currency and duration rather than metal.

The pause in the war between the US and Iran has also had a negligible impact on gold prices. The Federal Reserve's interest rate decision, scheduled for Wednesday evening, will likely have a significant influence on the market.