On Thursday, Gold price edged down as the US dollar continues to rise to multi-year highs ahead of an expected interest-rate hike coming from the Federal Reserve next week even as the country reported its gross domestic product unexpectedly fell by 1.4% in the first quarter of 2022.
Gold for June delivery was last seen down US$1.90 to US$1,886.80 per ounce, the lowest since Russia began its invasion of Ukraine in late February.
The price decline comes as the US dollar continues to appreciate, with the ICE dollar index last seen up by 0.87 points to 103.83, the highest since 2017, making the metal more expensive for international buyers.
According to a Commerzbank analyst, “The trade-weighted dollar index has risen to its highest level since early 2017. Though gold in euro terms has fared better, it is likewise weaker at a good (Euro) 1,780 per troy ounce.”
However, the Federal Reserve is expected to raise interest rates by 50 basis points when it ends its two-day policy meeting in May, to slow inflation that is running at 40-year highs.
Expectations of higher rates are also pushing up bond yields, and appear bearish for the yellow metal since it offers no interest, with the yield on the US 10-year note last seen up 4.2 basis points to 2.876%.
The US Commerce Department has reported that the country’s Q1 2022 GDP fell by 1.4%, a sharp decline from the 6.9% rise reported in Q4 2021, according to Market Watch.