Gold Pressured by Strong Dollar and Fed Expectations
Gold prices fell on Friday, recording a fourth consecutive week of declines. Spot gold was at $3,998.74 per ounce, while US futures were at $4,015.90 per ounce. The decline was primarily driven by a stronger US dollar, which makes gold more expensive for holders of other currencies, as well as rising market expectations of an interest rate hike by the Federal Reserve.
On a weekly basis, gold is on track to lose nearly 4% and is down about 12% so far this month. Other precious metals also weakened, with silver falling 2.5% to $56.44 per ounce, heading for a 13% weekly decline, while platinum fell 1.8% to $1,573.60 per ounce, marking its seventh consecutive week of losses.
The strengthening US dollar was supported by the latest inflation data. The personal consumption expenditures (PCE) price index, the Fed's favorite inflation indicator, rose 4.1% year-on-year in May, its highest level in more than three years and the first time it has exceeded 4% since 2023. This data raises expectations that the Fed may need to tighten policy further to curb inflation, putting additional pressure on gold prices.
The market currently rates a 63% chance that the Fed will raise interest rates in September. Interest rate hikes typically reduce the appeal of gold because the precious metal offers no yield, so the combination of a strong dollar and high interest rate expectations continues to pressure gold prices.
Given this situation, investors are advised to closely monitor price movements, market sentiment, and upcoming economic data releases, as any changes can trigger significant volatility in gold and other precious metals. (Asd)*
Source: Newsmaker.id
