Gold prices drop to 3-week low on rate hike concerns

On Friday morning, gold prices dipped to a three-week low as the dollar gained strength amid the possibility that the US Federal Reserve may go for more rate hikes. This has hurt the appeal of the yellow metal in the market, analysts said.

The spot gold fell 0.2% to $1,754 according to a report by the Reuters. 44 per ounce. This is its lowest since July 29 when the yellow metal touched $1,752. According to reports, the metal has fallen by 2.6% this week. The US gold futures fell by 0.2% to $1,767. The Reuters report said that gold prices are highly dependent on the US interest rates as the fluctuations affect the chance of holding non-yielding bullion in a volatile market.

The yellow metal in the National Capital Region dropped by 32 to 52,224 per 10 grams in the domestic market on Thursday. It was trading at Rs 52,256 on Wednesday. Silver fell by Rs 348 and was trading at Rs 57,298 per kg, compared to Rs 57,646 per kg on Wednesday.

The prices in Mumbai remained the same. The price for 10 grams of 22-carat and 24-carat gold was Rs 47,900 and Rs 52,250.

The price of 10 grams of 22-carat gold dropped to Rs 48,380 in Chennai compared to Rs 48,490 on Wednesday. The price of 10 grams of 24 carat gold stood at Rs 52,770, compared to Rs 52,900 in the previous session.

The experts say that the price of gold may be unstable due to issues such as global growth worries, geopolitical issues, and inflation concerns. Investor interest in the world has been hampered by this. The US dollar may remain supported due to the fact that the US Fed is expected to bring in more rate hikes due to the fact that the gold prices may suffer. This would cause more pressure on gold prices.

Besides the prevailing economic and geopolitical issues, analysts believe that the gold has been supported on the downside by renewed China-US tensions over Taiwan after Washington and the island country agreed to start trade talks under a new initiative.