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Gold prices declined in the international market on Wednesday amid concerns that major central banks may keep interest rates elevated for longer to contain inflation. Investors are closely monitoring central banks’ monetary policy decisions as well as developments in the Middle East.
At 10:35am Bangladesh time on Wednesday (September 23), spot gold fell 0.2% to $4,345.55 per ounce. However, US gold futures for December delivery rose 0.2% to $4,383.10 per ounce.
Meanwhile, the US dollar remained near a two-month high. A stronger dollar makes gold, which is priced in US dollars, more expensive for buyers using other currencies.
Kyle Rodda, senior financial market analyst at Capital.com, said gold prices in the short term would largely depend on oil prices and developments in the Middle East. However, he said the precious metal’s long-term structural drivers remained strong.
Gold is generally considered a safe-haven asset and a hedge against inflation. However, higher interest rates increase the appeal of interest-bearing investments, potentially reducing demand for gold.
Meanwhile, US President Donald Trump has threatened to “destroy” Iran if no agreement is reached to end the war. At the same time, he has indicated that a deal could be reached soon amid ongoing diplomatic efforts at the United Nations.
Boston Federal Reserve President Susan Collins said in a LinkedIn post that she supported the US central bank’s decision to raise interest rates last week, citing risks that inflation could remain above the 2% target. However, Collins, who does not have voting rights on the Federal Open Market Committee this year, did not indicate whether she would support another rate hike in the future.
Last week, the Federal Reserve raised its policy rate by 25 basis points to a range of 3.75% to 4%, while signaling the possibility of another rate hike before the end of the year. The Bank of Japan and the European Central Bank have also recently raised interest rates.
