Gold Prices Slide as Strong Dollar and Fed Rate Outlook Pressure Bullion

DHAKA —

Gold prices fell sharply in global markets on Wednesday as a stronger U.S. dollar and expectations of a tighter monetary policy stance from the Federal Reserve weighed on bullion demand.

Spot gold fell 0.9% to $4,316.78 an ounce at around 2:47 p.m. Bangladesh time. U.S. gold futures for December delivery declined 0.5% to $4,354 an ounce.

The decline came as investors reassessed the outlook for U.S. interest rates, bond yields and the dollar following recent signals from Federal Reserve officials.

Fed policy weighs on bullion

The Federal Reserve raised its benchmark interest rate by 25 basis points last week, lifting the target range to 3.75%-4%. The U.S. central bank has also indicated that another rate increase could come before the end of the year.

Higher interest rates tend to put pressure on gold because the precious metal does not pay interest or dividends. As returns on interest-bearing assets rise, investors may shift some funds away from non-yielding assets such as bullion.

A stronger U.S. dollar can also weigh on gold prices because the metal is traded globally in dollars, making it relatively more expensive for buyers holding other currencies.

Ole Hansen, head of commodity strategy at Saxo Bank, said gold was currently trading within a range of around $4,300 to $4,400 an ounce.

He said comments from Federal Reserve officials, U.S. interest rates, bond yields and their impact on the dollar were among the key factors influencing short-term investment decisions. Oil-price movements were also contributing to market sentiment, he added.

Precious metals broadly lower

The decline was not limited to gold. Other major precious metals also moved lower during Wednesday's trading.

Spot silver dropped 2.5% to $65.39 an ounce, while platinum fell 2.1% to $1,794.28 an ounce.

Palladium declined 1.7% to $1,285.65 an ounce.

The broad weakness across the precious-metals market came as investors remained focused on the trajectory of U.S. monetary policy and the direction of the dollar.

Gold remains costly in Bangladesh

Gold prices in Bangladesh remain high despite the decline in international markets.

The current price of 22-carat gold, including value-added tax, stands at Tk 234,621 per bhori, with one bhori equivalent to 11.664 grams.

The price of 21-carat gold has been set at Tk 224,065 per bhori, while 18-carat gold costs Tk 192,398 per bhori. Gold sold under the traditional system is priced at Tk 157,172 per bhori.

Local gold prices can differ from international spot prices because domestic pricing is also influenced by currency movements, taxes, import-related costs and local market conditions.

What markets are watching

For gold traders and investors, the direction of U.S. interest rates and the dollar remains a key factor in determining the metal's near-term trajectory.

Markets are also watching developments in inflation, U.S. Treasury yields, oil prices and broader economic conditions, all of which can influence demand for bullion.

While gold is traditionally viewed as a hedge against inflation and a safe-haven asset during periods of economic uncertainty, its performance can come under pressure when higher interest rates increase the relative appeal of income-generating investments.