Gold falls to over one-week low on firm dollar, Fed rate hike bets
The dollar’s strength against major peers makes greenback-priced bullion more expensive for holders of other currencies
On Thursday, gold prices plummeted to their lowest point in over a week, falling more than 0.2% to $3,981.49 per ounce, after stronger-than-anticipated US inflation data and hawkish comments from Federal Reserve officials pushed the dollar higher and heightened expectations of an interest rate increase next month. US gold futures for December delivery also declined 0.3% to $3,987.50. The surge in the dollar made the price of gold more expensive for investors holding foreign currency-denominated assets.
In a note, analysts at OCBC stated that while the macroeconomic environment has become less favorable for gold, they do not anticipate a bearish outlook in the medium term. However, market participants remain uncertain about the direction of gold prices, as they await further economic indicators, such as the upcoming US Producer Price Index (PPI) report due on Friday.
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