Gold prices fall as gold is failing to attract buyers. The interest hike of US Dollars has made the dollar more attractive. The Federal Reserve implemented one of the most aggressive interest rate hikes in its history.
Many policymakers think that the increased interest rate is a worrying sign for gold. On the other hand, the rupee is weak and this attracts buyers to use gold to conserve their asset value.
Gold prices have slipped to a 3-week low. The stronger dollar and the high possibility for the US Federal Reserve to increase the interest rate have dented the appeal of the yellow metal.
Resurgence of Dollar is Detrimental to Gold Prices
As a result of the interest hike, the dollar has reached its one-month high. Fed official, James Bullard, released a statement that he is of the view that it is likely that the Federal Reserve will implement a third 75 basis points interest rate hike.
Similarly, Mary Daly is also supportive of a 50 to 75 basis point interest rate hike. Although Federal Reserve claimed that the rate hikes depend on the incoming economic data, the public generally thinks that it is very likely that there will be a further rate high, and therefore many buyers are pessimistic about the prospect of gold prices.
The resurgence in the dollar is detrimental to the prices of the precious metal, according to the senior market analyst at Oanda Corp. Gold prices fell to 1750.34 per ounce while the Dollar Spot Index jumped by 0.5%.
Adhered to a similar logic, spot silver, platinum, and palladium prices have all declined after the Federal Reserve officials have shown their determination to hike interest rates to combat inflation, though the officials have divergent views on the size of the next rate hike.
