Gold prices remained under pressure on Wednesday, slipping toward their lowest levels in nearly two weeks as a stronger U.S. dollar and growing expectations of further Federal Reserve tightening reduced investor appetite for the precious metal.
Spot gold declined 1.1% to $4,067.72 per ounce by 05:42 ET (09:42 GMT), after falling to an intraday low of $4,050.6 per ounce earlier in the session.
U.S. Gold Futures dropped 1.6% to $4,083.60.
The metal has now posted losses in five of the last six trading sessions and is coming off three consecutive weeks of declines.
The DXY dollar index climbed to its highest level in 13 months as investors increased expectations that the Federal Reserve may raise interest rates in July and potentially again before year-end. A stronger dollar typically weighs on gold by making it more expensive for buyers using other currencies, while higher interest rates increase the opportunity cost of holding non-yielding assets.
Market expectations for tighter monetary policy have strengthened following last week’s Federal Reserve meeting and a series of hawkish comments from policymakers.
Traders are currently assigning around a 70% probability to a rate hike by September, while another increase is fully priced in by December.
“A stronger US dollar and expectations that the Fed could keep rates higher for longer outweighed safe-haven support from geopolitical risks,” ING analysts said in a note.
Additional pressure came from easing concerns over potential disruptions to Middle Eastern energy supplies.
Investors continued to assess diplomatic negotiations between Washington and Tehran after both countries reported progress toward a broader peace arrangement aimed at improving the flow of energy shipments through the Strait of Hormuz.
Despite the progress, unresolved issues remain, including nuclear monitoring requirements and access to frozen Iranian assets.
“While geopolitical risks remain elevated, gold is likely to trade in line with Fed expectations, leaving prices vulnerable to higher yields and a stronger dollar in the near term,” analysts added.
Attention now turns to Thursday’s U.S. Personal Consumption Expenditures (PCE) inflation report, which could offer fresh guidance on the Fed’s next policy moves.
Elsewhere in precious metals, silver rose 0.8% to $61.12 per ounce after falling more than 5% in the previous session.
Platinum slipped 1.2% to $1,634.81 per ounce.
In industrial metals, benchmark copper futures on the London Metal Exchange eased 0.3% to $13,343.88 per tonne, while U.S. copper futures declined 0.6% to $6.10 per pound.
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