Gold slips as rate outlook and firm dollar weigh on sentiment
Gold eased as investors weighed prolonged high interest rates and a firm dollar, with Middle East risks and central bank buying in focus.
Gold prices edged lower on Wednesday as investors assessed the likelihood of major central banks holding interest rates high for longer in their effort to bring persistent inflation under control.
Spot gold slipped 0.2% to $4,345.99 an ounce by 0147 GMT, while US gold futures for December delivery gained 0.2% to $4,382.70. The dollar held close to its strongest level in two months, making dollar-priced bullion costlier for buyers using other currencies.
"Short-term volatility in gold very much depends on how oil trades and the developments that happen in the Middle East. However, long-term structural drivers for gold are still really strong," said Kyle Rodda, senior financial market analyst at Capital.com.
Gold is often viewed as a hedge against inflation, but its appeal tends to weaken when higher rates lift returns on interest-bearing assets.
US President Donald Trump warned he could annihilate Iran if no deal is reached to end the war, while also suggesting an agreement could come soon amid a diplomatic push at the United Nations.
Boston Federal Reserve President Susan Collins said in a LinkedIn post that she backed the US central bank's decision last week to raise interest rates, citing risks that future inflation will run above the 2% target. Collins, who is not a voting member of the rate-setting Federal Open Market Committee this year, did not say whether she wants rates raised again.
The Fed last week lifted its benchmark rate by 25 basis points to 3.75%-4.00% and signalled another increase could come before year-end. The Bank of Japan and the European Central Bank have also raised rates recently.
Analysts at BMI kept their 2026 gold price forecast at an average of $4,400 an ounce, noting that elevated geopolitical risks and continued central bank purchases are expected to provide a strong floor for gold around the $3,800 level.
Among other metals, spot silver fell 0.4% to $66.78 an ounce, platinum lost 0.8% to $1,818.21 and palladium declined 0.4% to $1,302.61.