Gold Price Rises as Fed Rate Hike Expectations Weigh on Asset
Gold prices have been steadily increasing on Wednesday, despite being set for a monthly decline. Spot gold is up by 0.2% to reach $4,188.17 an ounce as of 0920 GMT, while US gold futures jumped 1% to $4,219.90.
The stronger dollar is making gold more expensive for holders of other currencies, and investors are waiting for US inflation data to assess the possibility of Federal Reserve rate hikes. Giovanni Staunovo, analyst at UBS, attributes gold's recent weakness to higher oil prices and increased probability of further US rate hikes.
Gold's sensitivity to interest rates is a major concern, as it does not offer investors a yield. Jamie Dutta, market analyst at Nemo.money, notes that 'gold is very sensitive to expectations around Fed hikes and statements from officials.'