Gold prices continued their decline on Wednesday as investors took profits and the dollar strengthened. This marked the second consecutive day of losses following the sharpest daily drop since 2020.
Spot gold fell 1.4% to $4,067 per ounce after rising as high as $4,161 earlier in the session. US December gold futures contracts also fell 0.7% to trade at $4,081.
The dollar index remained near its highest level in the past week, making gold more expensive in dollar terms. On Tuesday, gold had fallen 5.3% from its record high of $4,381 reached the previous day. Nevertheless, it has recorded a 54% increase since the beginning of the year, driven by geopolitical risks, interest rate cut expectations and increased ETF demand.
ActivTrades analyst Ricardo Evangelista said, “Gold had technically entered the overbought zone; this caused many investors to realize their profits.”
Technically, prices are finding support above the 21-day moving average of $4,005. Markets are now focused on the US Consumer Price Index (CPI) data; This data will provide clues about the pace of the Fed’s interest rate cuts.
According to analysts, the Fed is expected to make a 25 basis point cut next week and decide on another cut in December.
StoneX analyst Rhona O’Connell commented, “We are living in an age of uncertainty; therefore, every sharp drop in gold can create new buying opportunities.”
In other metals, silver fell 0.9% to $48.28/ounce, platinum fell 0.1% palladium fell by 1% to $1,549, while palladium traded at $1,394, down 1%.
