Gold Prices Slide Amid Rising Rate Hike Expectations
Gold prices declined on Thursday as investors anticipated further tightening of monetary policy by the US Federal Reserve. Spot gold fell by 0.3% to $4,274.79 per ounce at 0702 GMT. US gold futures for December delivery dropped 0.2% to $4,309.80.
According to Ross Maxwell, chief strategy officer at VT Markets, investors are currently focused on the Fed's 'higher-for-longer' stance following last week's rate increase, fluctuations in the US dollar and Treasury yields, and Middle East developments related to oil and energy supply risks.
A clearer signal of another rate hike would put downward pressure on gold. Oil prices continued their upward trend after a 4% gain in the previous session, driven by diplomatic talks between the United States and Iran showing no concrete progress.
US inflation pressures and a strengthening economy appear to be pushing the Fed towards a rate hike ahead of critical national elections, with traders betting on another policy tightening in late October. However, gold is often regarded as an inflation hedge, but rising interest rates tend to diminish its appeal relative to interest-bearing investments.