Seven-Session Gold Slump: Dollar Strength Trumps Global Uncertainty
Gold prices have been experiencing a slump for seven consecutive sessions, despite the worsening global economic conditions. The metal's recent price drop can be attributed to the strengthening of the US dollar, which has increased expectations of rate hikes by the Federal Reserve.
This has made non-US purchases of gold more expensive due to its dollar-based pricing. As a result, demand for the metal has been deterred. Gold had previously benefited from the global 'dollar debasement' trade, similar to Bitcoin, but this trend may have been outweighed by investor shifts towards US Treasury and other bonds with hardened yields.
War tensions in the Strait of Hormuz have driven up crude oil prices and inflation risks, yet gold prices continue to fall. Traders assign a two-thirds probability to the Fed raising its key policy rate this month. In India, Prime Minister Narendra Modi has called for people to buy less gold as part of an effort to conserve dollars.