As the dollar increases in value, gold price slides to a two-week low.
On Wednesday, gold price dropped to their lowest point in almost two weeks as the dollar strengthened as investors waited for the newest information on the Federal Reserve's preferred inflation gauge report, which is expected later this week, to provide insight into the possibility of rate cuts.
Spot gold dropped 0.5% to $2,308.00 an ounce, its lowest level since June 14. American gold futures
down 0.5% to $2,319.50 as well.
According to Lukman Otunuga, senior research analyst at FXTM, "gold flashed red on Wednesday thanks to hawkish comments from a Fed official in the previous session and a stronger dollar."
On Tuesday, Federal Reserve Governor Michelle Bowman restated her belief that keeping the policy rate unchanged "for some time" will likely be sufficient to control inflation. However, she also reaffirmed her readiness to increase borrowing costs if necessary.
The opportunity cost of owning non-yielding bullion rises with higher interest rates.
The benchmark 10-year yield also moved higher, and the dollar appreciated 0.3% vs its competitors, increasing the cost of gold for holders of other currencies.
"Given the political and economic circumstances, gold could have a crazy week. The PCE data and the Biden-Trump debate could cause fresh volatility in the precious metal. Support is located at $2300 and resistance is at $2340 in the short term, according to Otunuga.
Investors will be paying an eye on the personal consumption expenditures (PCE) price index report on Friday, in addition to the first estimates for the US first-quarter gross domestic product and the crucial debate between US President Joe Biden and Republican opponent Donald Trump on Thursday.
According to data released on Tuesday, consumer confidence in the US decreased in June due to concerns about the country's economic future. However, households were still optimistic about the job market and anticipated a slowdown in inflation over the coming year.
Another way to protect against economic instability is with gold.
Palladium dropped 0.4% to $943.91, spot silver declined 0.2% to $28.86, while platinum increased 1.5% to $996.10.
