Gold prices have stabilized near their lowest level in two and a half years, affected by the strengthening dollar and central banks' commitment to a strict stance on interest rates to curb inflation. As of 04:15 GMT, the spot gold price fell 0.3 percent to $1,637.85 per ounce. Earlier in the session, prices dropped 1 percent to a low of $1,626.41, the lowest since April 2020. U.S. gold futures dropped 0.6 percent to $1,645. The dollar index, which measures the performance of the U.S. currency against six major currencies, rose to its highest level since 2002, supported by a decline in the British pound.
Last week, the Federal Reserve and several other major central banks raised interest rates, raising concerns about their impact on growth. A survey on Friday indicated a worsening slowdown in business activity in the Eurozone in September. Meanwhile, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, stated on Sunday that he still believes the U.S. central bank can reduce inflation without significant job losses, given the ongoing momentum in the economy, according to Reuters.
The rise in U.S. interest rates diminishes the attractiveness of gold, which does not yield returns, at the same time as it strengthens the dollar, in which gold is priced. Gold prices have fallen more than 20 percent since surpassing the key $2,000 per ounce mark in March. For other precious metals, the spot silver price declined 1.6 percent to $18.54 per ounce, after earlier dropping to its lowest level in over two weeks. Platinum prices rose 0.5 percent to $858.40, and palladium prices increased 0.9 percent to $2,084.79.
