- BIST10012,118-1.08%
- USD49.39+0.05%
- EUR55.30+0.16%
- GOLD4,177.60+1.70%
- INTEREST37.00%-1.00
- BITCOIN81,004-0.70%
- October 15, 202615°
- BIST10012,118-1.08%
- USD49.39+0.05%
- EUR55.30+0.16%
- GOLD4,177.60+1.70%
- INTEREST37.00%-1.00
- BITCOIN81,004-0.70%
- October 15, 202615°
Gold hits two-week low as dollar strengthens and rate hike expectations mount
Gold prices fell to their lowest level in two weeks, pressured by a stronger US dollar and growing expectations that the Federal Reserve will raise interest rates.
Gold prices remain under pressure as the US dollar climbs to a one-year high and expectations for a Federal Reserve rate hike strengthen. Spot gold lost 0.6 percent on Wednesday, falling to $4,088 per ounce and touching its lowest level since June 11.
August-dated US gold futures were trading 1.1 percent lower at $4,103.7 per ounce.
Trump's Iran remarks and Tehran's denial
Another development adding to market uncertainty was conflicting signals over talks between the US and Iran. US President Donald Trump claimed on Tuesday that Iran had accepted nuclear inspections "indefinitely." However, the Tehran administration denied that any such concession was made during the negotiations.
The parties are also at odds over the details of a provision that would give Iran access to funds frozen in overseas accounts.
Rate hike expectations weigh on gold
Ilya Spivak, head of global macroeconomics at Tastylive, said the pressure on gold is being fed by war-driven developments. Spivak noted that "inflation accompanying rate hikes has manifested itself in falling bond prices, rising yields, a stronger dollar and declining gold."
Gold prices have dropped roughly 23 percent since the US and Israeli attacks on Iran began in late February. Mounting inflationary pressures are fueling expectations that the Fed will raise interest rates.
Traditionally seen as a hedge against inflation, gold loses its appeal as a non-yielding asset when interest rates rise. The dollar index reaching its highest level in more than a year makes gold more expensive for buyers using other currencies.
According to CME Group's FedWatch tool, investors now expect three rate hikes from the Fed this year. That expectation has risen markedly from a single hike foreseen ahead of last week's Fed meeting.
Markets are now focused on the personal consumption expenditures data due Thursday, the Fed's preferred inflation gauge. The figures will offer additional clues on the future of monetary policy.
Other precious metals also decline
Selling pressure appears to have spread across the precious metals market. Spot silver fell 1.6 percent to $61 per ounce, while platinum lost 1.2 percent to $1,632.04. Palladium traded 1 percent lower at $1,225.35 per ounce.
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