Gold Prices Fall Sharply as Strong Dollar, Hawkish Fed Weigh on Market
International Desk:
Spot gold was down 0.9% at $4,316.78 an ounce at around 2:47 p.m. Bangladesh time. U.S. gold futures for December delivery fell 0.5% to $4,354 an ounce.
The decline came as investors assessed the outlook for U.S. interest rates and the broader implications for the dollar and bond yields. Higher interest rates generally reduce the appeal of gold, which does not generate interest or other regular income.
Ole Hansen, head of commodity strategy at Saxo Bank, said gold was currently trading within a range of about $4,300 to $4,400 an ounce.
He said comments from Federal Reserve officials, U.S. interest rates, bond yields and their impact on the dollar, along with movements in oil prices, were playing an important role in short-term investment decisions.
Fed policy remains in focus
The Federal Reserve raised its benchmark interest rate by 25 basis points last week, taking the target range to 3.75%-4%.
The U.S. central bank has also signalled the possibility of another rate increase before the end of the year, keeping financial markets focused on the path of monetary policy.
Gold is widely regarded as a hedge against inflation and a safe-haven asset during periods of economic or geopolitical uncertainty. However, rising interest rates can make interest-bearing assets relatively more attractive, potentially reducing demand for gold.
A stronger dollar can also weigh on bullion because gold is primarily priced in U.S. currency. When the dollar rises, the metal can become more expensive for buyers using other currencies.
Other precious metals also decline
Other precious metals also came under pressure on Wednesday.
Spot silver fell 2.5% to $65.39 an ounce, while platinum declined 2.1% to $1,794.28 an ounce.
Palladium dropped 1.7% to $1,285.65 an ounce.
The broad-based decline across precious metals reflected a cautious market environment as investors continued to assess the outlook for U.S. monetary policy and currency markets.
Gold prices remain high in Bangladesh
Despite the decline in international prices, gold remains expensive in Bangladesh.
The current retail price for 22-carat gold in Bangladesh, including value-added tax, is Tk 234,621 per bhori, equivalent to 11.664 grams.
The price of 21-carat gold has been set at Tk 224,065 per bhori, while 18-carat gold is priced at Tk 192,398 per bhori. Gold sold under the traditional system is priced at Tk 157,172 per bhori.
Local gold prices do not necessarily move in line with international prices on a one-to-one basis. Domestic pricing also reflects factors including currency movements, import-related costs, taxes and duties, and the local market’s pricing mechanism.
For investors, the direction of the U.S. dollar and Federal Reserve interest-rate policy is likely to remain central to the near-term outlook for gold, while developments in global inflation, bond yields and commodity markets could continue to influence prices.
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