Gold prices fell as markets focused on the US Federal Reserve’s decision on interest rates. Gold is usually influenced by Fed decisions due to its inverse relationship with interest rates. When the Fed is expected to keep interest rates high or increase them, the cost of holding gold rises, which puts pressure on prices.
Factors affecting the decline of gold:
US Federal Reserve policy: if the Fed signals the raising or continuation of high interest rates to curb inflation, the US dollar strengthens, which reduces the attractiveness of gold.
The strength of the US dollar: the appreciation of the dollar makes gold more expensive for holders of other currencies, which leads to a decline in demand for it.
US bond yields: increased bond yields make fixed-yield assets more attractive compared to non-yielding gold.
If the forecast of tightening US monetary policy continues, Gold is likely to remain under pressure. However, prices may rise in the event of any economic or geopolitical developments that lead investors to seek safe havens