, with 22-carat and 24-carat gold showing declines. A firmer US dollar and cautious trading ahead of upcoming economic data contributed to the drop.
One big reason for the dip was a firmer US dollar, which gained about 0.6%. Since gold is priced in dollars, a stronger greenback makes it more expensive for buyers holding other currencies. US Treasury yields also inched higher, adding further weight.
Traders were also cautious after Federal Reserve Chair Jerome Powell spoke on Tuesday. He avoided giving clear signals on the timing of future interest rate cuts, stressing the need to balance inflation risks with a slowing job market.
Markets still expect two small rate cuts later this year — one likely in October and another in December, according to the CME FedWatch tool. Lower interest rates usually favour gold, as it does not offer interest but gains appeal when yields fall.
Attention now turns to US economic numbers due later this week. Investors are waiting for jobless claims data on Thursday and the Personal Consumption Expenditures (PCE) index on Friday, which is the Fed’s preferred inflation gauge. These updates could give fresh clues on where interest rates are headed.
Additionally, geopolitics also remains in focus. Ukraine said it had struck two oil pumping stations in Russia’s Volgograd region overnight, keeping tensions high. Such developments often increase the appeal of safe-haven assets like gold.
Simply put, gold’s retreat shows how sensitive the metal is to moves in the dollar, interest rate expectations, and geopolitical risks. While prices eased from record highs, many traders remain watchful of upcoming US data and global tensions that could quickly swing momentum again.