Gold prices fall below $4,000: Fed rate hike expectations increase pressure

Persistent inflationary pressure and statements from US Federal Reserve (Fed) officials suggesting a potential interest rate hike in December have put pressure on gold prices, pulling them below the $4,000 per ounce level.

With the opening of Asian markets, the price of gold continued its downward trend, falling to $3,980 per ounce. While markets have largely priced in a 0.25 percentage point rate hike in December, some investors are also considering the possibility of a higher 0.50 percentage point increase.

Chicago Fed President Austan Goolsbee found the October inflation data concerning, while Fed policymaker Anna Paulson stated that high price pressures are not transitory. These statements stand out as factors reducing the appeal of gold, which does not yield interest, among investors.

The yield on US 2-year Treasury bonds rose by 0.18 percentage points over the last two trading days. Analysts at ANZ Bank stated that this rise in bond yields and the strengthening of the dollar are negatively affecting demand for gold, and that the resilience of economic data strengthens expectations that the Fed will pursue a tighter monetary policy.