Global gold prices show a decline due to traders' expectations of a hawkish US Federal Reserve policy

The price of gold on international markets recorded negative dynamics after the publication of updated data on the inflation rate in the United States, which forced investors to revise forecasts for interest rate cuts. As of Thursday morning, the spot price of the precious metal fell by 0.3% to $5,160.82 per ounce, as fears of persistently high borrowing costs outweighed demand for safe-haven assets. This was reported by Bloomberg, writes UNN.

Details

The strengthening of the Bloomberg Dollar Index by 0.1% created additional pressure on the metals market, making gold more expensive for holders of other currencies. Although inflation indicators remained subdued at the beginning of the year, the escalation of hostilities between the US, Israel, and Iran provoked a jump in oil prices, forcing central banks to postpone monetary policy easing. Gold, which does not yield interest income, becomes less attractive to long-term investors during periods of high rates, but it retains its role as a source of liquidity to support investment portfolios in conditions of market instability.

Fluctuations in demand and the state of the energy market

Despite the current decline, gold has shown a one-fifth increase in value since the beginning of the year, supported by its status as a safe-haven asset during geopolitical crises. However, since the beginning of the war on February 28, the upward momentum has slowed significantly, and metal reserves in exchange-traded funds have begun to decline.