Gold Drops Amid Stronger Dollar

 Gold Drops Amid Stronger Dollar

Gold Drops Below $19K Amid Stronger Dollar And High-Interest Rates

During Wednesday, Gold prices slipped below the $19000 level as the sharp selldown continued amid fears of high-interest rates. The recent messaging from the Fed was very hawkish and gave no signals of any rate cuts or the prospects of no more rate hikes.

That's why the US Dollar is now on the front foot and is thus pushing the Gold, Silver, & other metals lower. In fact, the US Dollar has touched its 10-month high in the recent week as a large amount of money moved from Gold into yielding assets like the USD.

Gold Trades Near $1897 / Ounce

For the next few months, 1 more rate hike from the Fed is on the cards, and the rate cuts will likely start somewhere in 2024. So, in the near term, the prospects of a bullish Gold are very slim unless the rate cut program officially kicks in!

Spot Gold (XAU/USD) was last seen near $1897.49, with a 0.2% decline. This was the first time that the Gold sellers broke the $19K support level and thus represents a major trend shift.

Similarly, the Gold futures for December are also down by 0.2% and seen near $1914. Historically speaking, the recent Gold futures price is at a monthly low and represents the apparent US Dollar strength.

According to one expert, the rise in interest rates has made it difficult for non-yielding assets like Gold. At the same time, it has given a good opportunity for the investors to flock towards the US Dollar as it is gaining ground against its peers.

That's why it wouldn't be wrong to say that a strong Gold recovery has very slim chances unless the rate cuts start in 2024.

If we look at the European side, the interest rate is also high, which means XAU/EUR will also stay higher. So, even on that front, things don't look that good for the yellow metal.

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