Gold price hits nine-month low as dollar reaches two-decade high
Gold extended its selloff to a nine-month low on Wednesday as investors await the US Federal Reserve’s June meeting minutes for clarity on the nature and pace of interest rate hikes coming up.
Spot gold dropped 1.6% to $1,737.11 per ounce by 1:15 p.m. ET, adding to its losses from the previous session. US gold futures also fell 1.6% to $1,735.90 per ounce in New York.
Meanwhile, the US dollar again hit a two-decade high, emerging as the preferred haven of late for investors looking to hedge growing recession fears, while also making bullion pricier for overseas buyers.
“Demand for all commodities, including gold, is being pummelled as funds offload due to recession fears,” Daniel Ghali, commodity strategist at TD Securities, told Reuters.
“We could see gold traders react to the Fed’s hawkish tilt. We continue to see gold fall over the next six months and prices hitting below $1,700 is on the cards.”
Gold may struggle to recover in the near term unless momentum dissipates from the dollar, StoneX analyst Rhona O’Connell said, adding that the dip below $1,800 did trigger some bargain hunting.
More major central banks raised rates in June than in any month in at least two decades, Reuters calculations showed, and with inflation at multi-decade highs, policy tightening is unlikely to let up this year.
