Gold Tumbles with Stronger Dollar and Higher Rates

Gold prices dropped by about 0.9% to around $4,318 an ounce on Wednesday as a stronger U.S. dollar and expectations that interest rates could remain high for longer reduced demand for the non-yielding metal.

The dollar index climbed to its highest level since July 30, making gold more expensive for overseas buyers. The Federal Reserve raised its benchmark rate by 25 basis points last week to a range of 3.75%-4.00%, its first increase in over three years.

Higher interest rates tend to weigh on gold because the metal does not pay interest, and investors can earn higher returns from bonds and other yield-bearing assets. Boston Fed President Susan Collins said that a somewhat more restrictive policy rate could be needed to return inflation sustainably toward the central bank's 2% target.

Despite falling oil prices, which have eased some inflation pressure, gold continues to struggle as investors focus on real yields and the dollar. However, strong Chinese demand and central-bank buying are helping limit deeper losses, with Chinese gold imports reaching roughly 1,000 tonnes during the first eight months of 2026.