Gold Prices Plummet as Strong USD and Interest Rate Hikes Dominate Market
World gold prices plummeted nearly 1% on September 23 as the US dollar (USD) reached its highest level in two months. The strong USD put pressure on gold, making it more expensive for buyers holding other currencies.
The spot gold price fell to $4,317.65 per ounce, while December gold futures contracts decreased by 0.52% to $4,353.50 per ounce.
Market analysts believe the Federal Reserve (Fed) will continue to raise interest rates, which could further reduce demand for gold since it doesn't generate interest income.
The Fed's recent decision to increase interest rates by 0.25 percentage points has strengthened expectations of future rate hikes. The market currently values the probability of the Fed raising interest rates in October at around 53%, according to the CME FedWatch tool.