Gold Prices Tumble as Dollar Gains Strength and Rate Hike Bets Intensify
Gold prices are set to decline for the week as the US dollar gains strength and investors anticipate higher interest rates from the Federal Reserve. Spot gold has fallen by 0.2% to $4,270.40 an ounce at 0035 GMT, leaving it more than 2% lower for the week. In contrast, US Gold futures have risen by 0.2% to $4,304.80.
The stronger dollar makes gold more expensive for buyers holding other currencies, while rising US Treasury yields also put pressure on demand for non-yielding metals like gold. According to Kelvin Wong, senior market analyst at OANDA, 'Focus will definitely continue to be on the interest rate situation. When we start to see markets pricing in a much more hawkish Fed, it strengthens the dollar and is negative for gold.'
Market expectations that US interest rates may remain high have contributed to the decline in gold prices. This is because investors are increasingly motivated to hold yield-bearing assets as borrowing costs and bond yields rise.