Gold Prices Sink Amid Fed Uncertainty and Stronger Dollar

Gold prices closed last week at $4,285 per ounce, down nearly 2% from the previous week amid market uncertainty over US Federal Reserve interest-rate policy and expectations ahead of key inflation data. The precious metal experienced significant volatility during the week, coming under selling pressure from a stronger US dollar and rising US Treasury yields before recovering some of its losses toward the end of the week.

Dar Al-Sabaik Company attributed the pressure partly to the Federal Reserve's recent decision to raise interest rates by 25 basis points to a range of 3.75-4 percent, alongside signals from several Fed officials that another rate hike this year remains possible. The company noted that updated Fed projections showed 16 of the 18 officials expecting at least one further rate hike this year.

Rising US Treasury yields and the stronger dollar generally make gold more expensive for holders of other currencies, weighing on its price. Oil prices have also become increasingly important in shaping expectations for inflation and US monetary policy, as higher energy prices could revive inflationary pressures and reinforce expectations that interest rates will remain elevated for longer.