Fed Hawkishness Weighs on Gold Amid Strong Dollar
Gold prices fell to around $4,330 an ounce on Wednesday as the dollar strengthened and expectations for further Federal Reserve tightening weighed on bullion. Spot gold was down about 0.6% in late Asian trade.
The Fed's hawkish tone is a major concern for gold investors, with Boston Fed President Susan Collins backing last week's quarter-point increase and warning of higher inflation risks. Richmond Fed President Thomas Barkin also cautioned that recent inflation shocks could prove persistent.
Despite the decline in oil prices, which has reduced the risk of another inflation shock, gold remains sensitive to changes in interest rates. Record Chinese imports and sustained official-sector buying have provided support for the metal, however.
China imported over 1,000 tonnes of gold through August, exceeding its total purchases for all of 2025, while Chinese investors have been buying bullion as a hedge against geopolitical uncertainty. The People's Bank of China bought 20.2 tonnes in August, its largest monthly addition since October 2023.
The World Gold Council reported that gold-backed ETFs attracted $18 billion in August, lifting total holdings to a record 4,189 tonnes.