On Wednesday, gold prices are falling amid a spike in oil prices, which has heightened concerns about accelerating inflation and tighter monetary policy in the U.S.
December gold futures on the Comex fell 0.9% to $4,356.60 per ounce, the lowest level since August 6.
“Geopolitical uncertainty is pushing up oil prices, heightening inflation risks and increasing pressure on the Fed to raise interest rates, which is strengthening the dollar and exacerbating factors unfavorable to gold,” said Nikos Tsabouras of Tradu.com (owned by Jefferies).
Traders are increasingly anticipating tighter monetary policy from the U.S. central bank. Based on interest rate futures, the market currently estimates a 68% probability that the Fed will raise rates in September, according to CME FedWatch.
The ICE DXY index, which tracks the dollar’s performance against six currencies (the euro, Swiss franc, yen, Canadian dollar, British pound, and Swedish krona), is up 0.2% and is at a two-week high. The strengthening dollar is weighing on demand for precious metals from holders of other currencies.
The price of silver is down 1.7% to $64.24 per ounce, while platinum is down 2.5% to $1,721.6 per ounce.
