Gold prices edged lower on Tuesday, as the US dollar continued to strengthen against a basket of major currencies. The dollar index, which measures the greenback against a basket of six other currencies, rose to its highest level in over two weeks.
A stronger dollar makes gold more expensive for buyers who use other currencies, which can weigh on demand. Gold is also seen as a safe haven asset, and its appeal can wane when the dollar is strong.
In addition, US Treasury yields rose on Tuesday, further weighing on gold prices. Higher yields make gold less attractive as an investment, as they offer a higher return for investors.
Spot gold was trading at $1,906.80 an ounce at 2:30 p.m. ET, down 0.2% on the day.
Looking ahead, gold prices are likely to remain under pressure in the near term as the dollar continues to strengthen and Treasury yields rise. However, any signs of a slowdown in the US economy could boost gold prices, as investors seek out safe haven assets.
Here are some other factors that could affect gold prices in the near term:
The outcome of the US Federal Reserve’s monetary policy meeting on Wednesday.
The release of US economic data, such as retail sales and unemployment claims.
Geopolitical developments, such as the ongoing conflict in Ukraine.
Overall, gold prices are likely to remain volatile in the near term, as they are influenced by a number of factors. However, the long-term outlook for gold remains positive, as it is seen as a hedge against inflation and a safe haven asset during times of uncertainty.