Gold Prices Plummet Amid Rising Yields, Dollar Strength

Gold prices took a plunge on Wednesday, falling by 3% to $4,120 and silver prices dropped 5% to $22.90. The metal's decline was attributed to rising bond yields and dollar strength, which increased the opportunity cost of holding gold.

The current macroeconomic backdrop remains challenging for gold, with the Fed's hawkish September decision and monetary tightening by major central banks driving interest rates higher and sending the dollar soaring. However, despite this, gold has shown resilience in recent weeks, suggesting that other factors are supporting demand.

Central bank buying remains a key source of support for gold prices, with central banks purchasing 23 tonnes in July alone. This trend is expected to continue as central banks seek to diversify their portfolios and protect against inflation risks.