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Gold dips as dollar firms

After the Fed chairman suggested last week that high-interest rates will persist for a while to restrain inflation, gold and silver prices fell substantially today. The metallic yellow had fallen.

Spot gold prices decreased further today on international markets due to a strong US dollar. Spot gold decreased to $1,720.22 per ounce as the dollar index increased to 109.29, a level not seen in nearly two decades. Bullion becomes more expensive for holders of other currencies when the dollar is stronger.

When Federal Reserve Chair Jerome Powell signaled that interest rates will continue to rise and stay high in order to stifle inflation, he pushed back against expectations that the US central bank would start relaxing monetary policy soon.

The Fed boosted rates, dulling the appeal of the non-interest bearing metal, and the price of gold is on track for its fifth consecutive monthly decrease, the longest such run in four years. A rising dollar has had a negative impact on gold prices in US dollars.

Gold premiums in top consumer China jumped last week to their highest since October as a fall in global prices encouraged purchases, while demand cooled in India as buyers waited for a bigger price drop.

Global central banks must take decisive action to battle inflation or risk losing the public’s trust, even if doing so causes their economy to enter a recession.

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