Gold is currently in freefall with the plunge below the key level of $1,800 an ounce earlier in the week followed by further daily declines to leave the precious metal set for its fourth weekly drop and trading at its lowest level since late September.
The driver of gold’s latest declines is comments from key Federal Reserve officials, Christopher Waller and James Bullard, with both backing a 75 basis point hike by the US central bank when the committee sits down later this month.
Live Gold Price - $/oz
The Fed’s adoption of more aggressive monetary policies initially provided a firm ceiling for gold’s potential gains but with the realisation that more hikes are still needed with inflation remaining stubbornly high, the market reaction has flipped over into a strengthening dollar with gold falling sharply out of favour.
Bearing in mind gold’s plunge has come before the Fed makes its monthly rate decision, further declines can’t be ruled out over the course of this month.
However, the glimmer of hope for gold investors will be that with the market reacting to the increasing likelihood of another 75 basis point hike by the Fed, any move that comes in below expectations would provide scope for gold to recover some of its recent losses.
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