Gold Prices Plummet on Strong Dollar and Rate Hike Expectations

Gold prices plummeted over 1% on Wednesday as the US dollar surged to a two-month high. The Federal Reserve's signal of bolstered rate hike expectations is putting pressure on gold, making it more expensive for holders of other currencies.

Peter Grant, vice president and senior metals strategist at Zaner Metals, attributed the decline in gold prices to the higher dollar. 'Post-FOMC Fed speak has been fairly hawkish,' he said, noting that market expectations are building in for at least one more rate hike before the end of the year.

US gold futures for December delivery dropped 0.8% to $4,341.90, while spot gold fell 1.1% to $4,304.89 per ounce. The rise in interest rates is reducing the appeal of gold as investors move toward interest-bearing assets.