Gold falls amid expectations of keeping interest rates high for longer

Gold prices fell 0.6% in spot trading to $4,329.31 per ounce, as investors assess the likelihood of major central banks keeping interest rates high for longer to combat persistent inflation. The dollar rose to a two-month high, adding to selling pressure on gold.

Gold prices fell 0.6% in spot trading to $4,329.31 per ounce during Wednesday's trading, as investors assess the likelihood of major central banks keeping interest rates high for longer in an effort to curb persistent inflation. US gold futures for December delivery also fell 0.2% to $4,366.90. The dollar rose to a two-month high, making gold more expensive for overseas buyers. The article quoted Kyle Rodda, a financial markets analyst at Capital.com, saying that short-term fluctuations in gold depend on how oil trades and developments in the Middle East, but the long-term fundamentals supporting gold remain very strong. The article noted that gold is typically seen as a hedge against inflation, but it loses its appeal when high interest rates boost returns on interest-bearing investments. The US central bank last week raised its benchmark interest rate by 25 basis points to a range of 3.75% to 4%, and hinted at the possibility of another increase before the end of the year. The Bank of Japan and the European Central Bank also recently raised interest rates. BMI analysts maintained their gold price forecast for 2026 at an average of $4,400 per ounce, noting that elevated geopolitical risks and ongoing central bank purchases will provide strong support for gold prices near the $3,800 level. Among other precious metals, silver fell 1.2% to $66.24, platinum lost 1.4% to $1,807.80, and palladium declined 1.1% to $1,293.68.