Gold prices dropped for the sixth consecutive trading session on Monday, reaching their lowest level in more than three weeks as a result of a stronger dollar and market participants’ anticipation of additional interest rate hikes from the Federal Reserve of the United States to combat rising inflation.
After falling to its lowest level since July 28 in early Asian trade at $1,743.83, the spot price of gold was down 0.1% as of 01:31 GMT, when it was trading at $1,746.06 per ounce. Over the last week, the price of the metal fell by roughly 3%.
Gold futures in the United States closed down 0.2% at $1,758.80 an ounce.
Gold prices increased by 0.1% as the dollar surged to a more than one month high versus its competitors, causing gold to become more costly for purchasers holding currencies other than the dollar.
In September, the Federal Reserve will increase interest rates by fifty basis points in response to estimates that inflation has reached its peak and rising concerns about the possibility of a recession, according to experts who participated in a survey conducted by Reuters.
Traders are now pricing in around a 46.5% possibility of a rate rise of 75 basis points in September and a 53.5% chance of a rate increase of 50 basis points.
A number of executives from the United States Federal Reserve said this week that the bank must continue to increase interest rates on loans in order to bring the country’s rising inflation under control.
Gold is very susceptible to changes in interest rates in the United States since a rise in these rates raises the opportunity cost of owning non-yielding metal.
This week, all eyes will be on the remarks that Federal Reserve Chair Jerome Powell makes on Friday at an annual meeting for central bankers from across the world that will be held in Jackson Hole, Wyoming.
The world’s biggest gold-backed exchange-traded fund, SPDR Gold Trust, said that its holdings increased by 0.32% on Friday, reaching 989.01 tonnes, up from 985.83 tonnes on Thursday.
Last week, there was a rise in demand for gold in India as the country’s prices fell to their lowest level in more than two weeks. However, volumes remained relatively modest in other Asian locations.
Spot prices for silver increased 0.2% to $19.06 per ounce, while prices for palladium rose 0.2% to $2,129.21. Platinum declined 0.3% to $893.38 per ounce.
