- BIST10011,699-0.84%
- USD49.58+0.05%
- EUR55.62+0.09%
- GOLD4,136.70-0.14%
- INTEREST37.00%-1.00
- BITCOIN83,336+0.48%
- October 21, 202619°
- BIST10011,699-0.84%
- USD49.58+0.05%
- EUR55.62+0.09%
- GOLD4,136.70-0.14%
- INTEREST37.00%-1.00
- BITCOIN83,336+0.48%
- October 21, 202619°
Gold hits two-week low as dollar rises and rate hike expectations grow
Gold prices fell to their lowest in two weeks, pressured by a strengthening dollar and expectations of a U.S. interest rate hike.
Gold prices remain under pressure as the U.S. dollar climbed to a one-year high and expectations of a Federal Reserve interest rate hike strengthened. Spot gold fell 0.6% on Wednesday to $4,088 per ounce, its lowest since June 11.
U.S. gold futures for August delivery fell 1.1% to $4,103.7.
Trump's remarks on Iran and Tehran's denial
Another development adding to market uncertainty was conflicting signals regarding talks between the U.S. and Iran. U.S. President Donald Trump said on Tuesday that Iran had agreed to nuclear inspections "indefinitely," but Tehran denied making any such concession during negotiations.
The sides also disagree on the details of a provision that would give Iran access to its frozen funds held in foreign accounts.
Rate hike expectations weigh on gold
Ilya Spivak, head of global macroeconomics at Tastylive, said the pressure on gold is fueled by war-related developments. "Inflation accompanying interest rate hikes led to falling bond prices, rising yields, a stronger dollar, and a decline in gold," he said.
Gold prices have fallen about 23% since late February, when the U.S. and Israel launched strikes against Iran. Rising inflationary pressures are fueling expectations that the Fed will raise interest rates.
Gold, traditionally seen as a hedge against inflation, loses its appeal as an asset that yields no return when interest rates rise. The dollar index reaching its highest level in over a year makes gold more expensive for buyers using other currencies.
According to CME Group's FedWatch tool, investors expect three rate hikes from the Fed this year, up from expectations of a single hike before last week's Fed meeting.
Markets are now focused on the personal consumption expenditures data due on Thursday, the Fed's preferred inflation gauge, which will offer further clues on the future of monetary policy.
Other precious metals also decline
Selling pressure appears widespread in the precious metals market. Spot silver fell 1.6% to $61 per ounce, while platinum lost 1.2% to $1,632.04. Palladium traded 1% lower at $1,225.35.
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