Spot gold fell 0.6% to $4,329.31 an ounce by 0623 GMT on Wednesday, while U.S. gold futures for December delivery declined 0.2% to $4,366.90, pressured by a stronger dollar and expectations that interest rates will remain high for longer.
Dollar and interest rates weigh on gold
The dollar index, which measures the U.S. currency against 6 major currencies, was steady at 100.56, near a two-month high. A stronger dollar makes dollar-denominated gold more expensive for holders of other currencies.
The U.S. Federal Reserve raised its benchmark interest rate by 25 basis points last week to a range of 3.75% to 4%, and signaled that another increase could be approved before the end of the year. The Bank of Japan and the European Central Bank have also raised interest rates recently, with Japanese rates reaching their highest level in 31 years.
Susan Collins, president of the Federal Reserve Bank of Boston, backed the rate increase amid the risk that inflation could exceed the 2% target in the future. Gold typically becomes less attractive when higher interest rates boost returns on income-generating investments, although the metal is used as a hedge against inflation.
Short-term fluctuations in gold depend heavily on how oil trades and on developments in the Middle East. But the long-term fundamentals supporting gold remain extremely strong.
Precious metals decline
The decline extended to other precious metals, with silver falling 1.2% to $66.24, platinum declining 1.4% to $1,807.80 and palladium falling 1.1% to $1,293.68 an ounce.
Gold price outlook for 2026
BMI analysts kept their forecast for the average gold price in 2026 at $4,400 an ounce, citing elevated geopolitical risks and continued central-bank purchases as two factors supporting prices.
