Gold Prices come Down on a Stronger Dollar, Setting up the Month’s Biggest weekly Drop

The stronger dollar has caused a drop in gold prices, which is expected to be the largest weekly drop in a month.

Gold Prices

Gold prices fell to their lowest level since the middle of May as a stronger dollar weighed on demand for greenback-priced bullion.

Friday’s decline in gold prices came as a result of a stronger dollar and rising US Treasury yields, which stifled demand for greenback-priced bullion.
At $1,844.25 per ounce, the spot price of gold fell by 0.7%. Gold futures in the United States dipped 0.2 percent to $1,846.90.

Despite a volatile week, gold prices are down about 1.5% from where they started the week, near a one-month high before falling to a four-week low on Tuesday.

“We haven’t made any significant progress. In search of direction, we’re still stuck in the $1,800 to $1,880-90 range “Ilya Spivak, a currency strategist at DailyFX, said that gold needs more clarity on the impact of interest rates on the market.

Because of this, the strategist predicted that gold prices would either fall or rise depending on whether or not investors believe that inflation can be held in check and therefore demand an alternative store of value such as the yellow metal.

Investors feared that rapid increases in interest rates would push economies into recession, and so global stocks were headed for their worst week since a market meltdown at the start of the pandemic in March 2020.

To combat rising inflation, the US Federal Reserve has raised interest rates for the first time since 1994. The opportunity cost of holding non-yielding gold increases as interest rates rise in the United States.

“Going forward, we expect dollar strength and recovering bond yields to cap gold prices,” Fitch Solutions said in a note as the Fed delivers on its hawkish position.

Inflation is rising around the world, and the pandemic is still going strong, so gold prices won’t fall back to pre-COVID-19 levels, according to the report.

Platinum and palladium prices both fell slightly, while silver fell 0.6 percent to $21.79 an ounce and platinum dipped 0.5 percent to $945.50 an ounce. Week-to-week declines loomed large for all.

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