Gold slides as hawkish Fed and strong US dollar override geopolitical fears
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Gold prices are declining despite escalating geopolitical tensions between the US-Israel and Iran, a departure from its typical role as a safe-haven asset. This downturn is attributed to fading expectations of interest rate cuts by the US Federal Reserve and a strengthening US dollar. The Fed held interest rates steady, projecting higher inflation amid economic uncertainty, which has dampened investor sentiment towards gold. A stronger US dollar, also considered a safe-haven asset, is adding further pressure on gold prices. Since a surge in early March, gold has fallen by approximately 15%, with a modest rebound failing to reverse the overall downtrend.
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AI-ExtractedThe Fed has held its benchmark rate steady at between 3.50 and 3.75 per cent.
Higher oil prices had also weighed on gold, Song said, noting that the metal was a non-yielding asset.
The metal has declined about 15 per cent since a brief surge on March 2.
Gold prices have continued to weaken despite escalating tensions in the US-Israel conflict with Iran.
The US dollar has gained more than 2 per cent this month.
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