Spot Gold Heads for Fourth Weekly Drop on Rate Hike Bets, Strong Dollar
Spot gold is poised for its fourth consecutive weekly decline as expectations of further US interest rate hikes and a robust dollar weigh on the precious metal.
Spot gold is on track for its fourth consecutive weekly decline, pressured by expectations that the US Federal Reserve will continue raising interest rates and a strengthening dollar. The precious metal has been under sustained selling pressure as higher rates increase the opportunity cost of holding non-yielding assets like gold. This dynamic is amplified by the real US 10-year yield, which has climbed sharply; gold historically exhibits a strong inverse correlation with real yields, as rising yields diminish gold's appeal relative to interest-bearing assets. Additionally, the US Dollar Index (DXY) has strengthened, further weighing on gold via the typical inverse relationship—a stronger dollar makes gold more expensive for holders of other currencies, dampening demand.
Gold prices have been sliding as market participants price in further rate hikes from the Fed, which have boosted the dollar and pushed bond yields higher. The yellow metal has also faced headwinds from reduced safe-haven demand as risk appetite improves, while central banks—which have been net buyers of gold since 2022 in a diversification push away from dollar reserves—have not been able to offset the selling pressure from ETF outflows. Notably, the SPDR Gold Trust (GLD) and iShares Gold Trust (IAU) have seen sustained redemptions, reflecting investor preference for yield-bearing assets. In the physical market, the COMEX-LBMA spread has widened, indicating dislocation between futures and physical delivery, though jewelry demand in price-sensitive markets like India and China has picked up at lower levels, providing some floor. Live gold prices and charts on NowPrice show the metal trading near recent lows, reflecting the bearish sentiment.
Looking ahead, traders will focus on upcoming US economic data, particularly inflation readings and employment figures, which could influence the pace of Fed tightening. Key support levels for gold are being tested, and a break below could accelerate losses. Any signs of a pause in rate hikes or a weaker dollar could provide a temporary reprieve for gold, but the overall trend remains bearish in the near term. A sustained move above resistance would require a shift in real yield expectations or a reversal in DXY momentum, while further weakness could be exacerbated by continued ETF outflows and speculative short positioning on COMEX.