By Bill Pan
Contributing Writer
Gold fell below $4,000 per troy ounce for the first time since November as the U.S. dollar climbed to its highest level in more than a year.
The precious metal opened on Wednesday at about $4,130 an ounce, down 0.5% from Tuesday’s closing price, before sliding to around $3,990. It later moved back above the $4,000 threshold.
Gold prices have more than doubled since late 2023, repeatedly setting record highs in a sustained rally. That momentum, however, began to fade in late January, shortly after gold hit an all-time high near $5,600 an ounce. By June, the metal had fallen more than 20% from that peak.
The slide on Wednesday came after Treasuries rallied on Tuesday, and a gauge of the U.S. dollar rose 0.4%, making dollar-denominated gold more expensive for many overseas buyers. The dollar index, which measures the greenback against a basket of major currencies including the euro and yen, rose to 101.40 on Tuesday, its highest level in more than a year.
The dollar extended its gains on Wednesday, reaching 101.69 before stabilizing during trading.
The greenback has strengthened as traders position for a more hawkish Federal Reserve, with markets increasingly expecting interest rates to rise later this year. At his first rate-setting meeting this past week, Federal Reserve Chair Kevin Warsh called the inflation — which is now at a three-year high — “a burden for the American people” and signaled that returning inflation to the central bank’s 2% benchmark would be his top priority.
Gold’s decline also came as volatility persisted across equity markets following a selloff in technology and semiconductor shares. On Tuesday, the pan-European Stoxx 600 Technology index led regional losses, falling 3%, while New York’s Nasdaq 100 index — home to Nvidia, Apple, Alphabet and Microsoft — lost more than 2%.
Such selloffs typically boost demand for the U.S. dollar and government bonds as safe-haven assets. Gold is also viewed as a haven investment, but it can fall during broad cross-market selloffs as investors sell the metal to raise cash.
Uncertainty surrounding the framework agreement between the United States and Iran to end the war also supported demand for safer assets after disagreements emerged between the two sides over several key issues.
Several major banks have cut their gold forecasts in the past week. Goldman Sachs lowered its year-end forecast by $500, now expecting bullion to finish the year at $4,900 an ounce. Deutsche Bank now expects gold prices to average $4,300 an ounce in the third quarter, down more than 22% from its previous outlook of $6,000, before rising to $4,800 in the fourth quarter.
