Gold Prices Slip as Stronger US Dollar and Higher Rate Expectations Weigh
Gold prices declined on Wednesday as a stronger US dollar and expectations of prolonged higher interest rates continued to pressure the precious metal. Investors remained focused on inflation risks and the possibility of additional monetary tightening by the Federal Reserve.
At 16:53 GMT, spot gold fell 0.9% to $4,318.05 per ounce, while gold futures eased 0.5% to $4,354.90 per ounce.
Meanwhile, the US Dollar Index (DXY), which measures the greenback against a basket of major currencies, rose 0.1% to 100.71, reaching its highest level since July 30. A stronger dollar typically makes gold more expensive for holders of other currencies, reducing international demand.
“US dollar has become the preferred safe-haven asset for investors during periods of uncertainty,” said David Morrison, Senior Market Analyst at Trade Nation, in a market note.
The greenback also found support from expectations that the Federal Reserve may maintain a restrictive monetary policy stance to combat persistent inflationary pressures, particularly those linked to elevated energy costs. Although crude oil prices have retreated below $100 per barrel amid easing concerns over Middle East supply disruptions and renewed diplomatic efforts, oil remains more than 60% higher than at the start of the year.
Last week, the Federal Reserve raised its benchmark interest rate by 25 basis points. Fed Chair Kevin Warsh signaled that further rate increases could be necessary in the coming months if inflation remains elevated. Additional comments from St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee also pointed to the possibility of more policy tightening to bring inflation under control.
Analysts at ANZ noted that gold has been trading within a relatively narrow range as investors balance the prospect of further rate hikes against growing investment demand for the precious metal.
According to ANZ, China’s gold imports reached approximately 1,000 metric tons during the first eight months of 2026. Chinese gold-backed exchange-traded funds (ETFs) added around 44 tons in August, while the People’s Bank of China accelerated its purchases, acquiring roughly 20 tons during the same month.
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