Gold prices face downward pressure as the US dollar index climbs to 100.50, while investors weigh the impact of potential Federal Reserve rate hikes against fluctuating energy costs.
Gold prices fell 0.5% as the dollar strengthened and Fed rate hike expectations weighed on bullion.
The US dollar index edged higher to 100.50, pressuring gold prices.
Brent futures rebounded above $100 a barrel after a recent decline, with geopolitical risks from the Middle East affecting supply expectations.
Gold prices retreated on Tuesday as a stronger US dollar and persistent Federal Reserve rate hike expectations weighed on the non-yielding asset. Spot gold fell 0.5% to $4,320.19, while Brent crude rebounded above $100 a barrel amid ongoing geopolitical tensions in the Middle East.
A stronger dollar makes gold more expensive for foreign currency holders, which typically reduces demand and exerts downward pressure on the metal's price.
Gold does not generate interest income; therefore, when interest rates rise, the opportunity cost of holding bullion increases, making interest-bearing assets more attractive to investors.