Gold prices took a hit on Wednesday, nearing a two-week low as the US dollar strengthened and investors anticipated higher interest rates. Spot gold declined approximately 1.1% to $4,067.72 per ounce, having reached an intraday low of $4,050.60. US gold futures mirrored this downward trend, underscoring a persistent weakness in the gold market.
The precious metal has seen its value drop in five of the past six trading sessions, marking a third consecutive week of losses. The $4,000 per ounce level is now a critical support point that investors are watching closely. The surge in the US dollar, which hit its highest point in more than a year, is a significant factor in this decline. A stronger dollar typically makes gold pricier for those using foreign currencies, thereby diminishing its demand.
Additionally, the prospect of rising Federal Reserve interest rates has put further pressure on gold prices. As gold does not generate interest income, higher rates appeal to investors by making other financial instruments more attractive, reducing the allure of gold as a safe haven.
Attention is now turning to the upcoming US PCE inflation report, which could play a pivotal role in shaping the Federal Reserve’s future decisions on interest rates. Meanwhile, easing concerns over potential energy disruptions in the Middle East have also lessened the demand for gold as a defensive investment option.
In contrast, silver prices saw an uptick following recent declines, climbing around 0.8% to $61.12 per ounce. However, gold continued to face downward pressure amid shifting market expectations.