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Rise of the dollar continues to pressure gold prices

gold prices

London, (Business News Report)|| Gold prices continue to decline, pressured by the rise in the dollar index to its highest level in more than two years, as the yellow metal fell in spot transactions by 0.6%.

Gold prices fell to $1,893.70 an ounce by 0809 GMT, while US gold futures fell 0.3 percent to $ 1898.60 an ounce.

“So, $1,900 is clearly a pivotal level for today’s session… looking further out, it’s not looking ideal at the moment with the U.S. dollar at a 25-month high,” trading firm City Index’s senior market analyst Matt Simpson said.

The dollar has remained at its highest level since the early days of the pandemic and is heading towards achieving the best month
since 2015, buoyed by the prospect of sharp interest rate hikes in the US and safe-haven inflows sparked by slowing growth in China and Europe.

The rising dollar makes gold less attractive to owners of other currencies. The US currency is also seen as a strong competitor to gold for safe haven status during economic and political crises.

According to Reuters, Simpson said that the news from Russia provided some support for gold on Tuesday as investors sought it as a safe haven, but the Ukrainian crisis has not been as supportive of bullion lately as it was a few weeks ago, and demand is unlikely to continue because of it during the week.

Russia’s energy giant Gazprom said it had halted gas supplies to Bulgaria and Poland for not paying for gas in rubles, the Kremlin’s strongest response yet to Western sanctions over the conflict in Ukraine.

Most of the Asian stock indices declined as growing concerns about the global economy prompted investors to dump riskier assets and resort to safe havens such as the US dollar and government bonds.

Silver fell in spot transactions 0.2 percent to $23.43 an ounce, and platinum lost 1.3 percent to $920.23. Palladium also fell 0.1 percent to $2,183.36.

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