Gold Prices Drop Amid Stronger Dollar and Higher Interest Rate Expectations
Gold prices have declined on Friday and are set to post a weekly loss due to the strengthening US dollar and expectations of higher interest rates from the Federal Reserve.
The spot gold price fell by 0.2% to $4,270.83 per ounce at 0425 GMT, with a decline of over 2% so far this week. In contrast, US gold futures edged up by 0.2% to $4,305.10.
A stronger dollar makes greenback-priced metals more expensive for holders of other currencies, while US Treasury yields extended gains. Markets are pricing in a nearly 69% probability of a US rate hike in October, according to CME's FedWatch Tool.
Gold is traditionally seen as a hedge against inflation, but higher rates can curb its demand by increasing the appeal of yield-bearing assets. Despite this, Joshua Rotbart, founder of J Rotbart & Co, remains 'very positive' on gold for the rest of the year, citing ongoing geopolitical friction and mounting sovereign debt.