Gold Prices Decline Amidst Federal Reserve Interest Rate Hike Fears

Kathmandu. Gold prices also fell on Monday amidst fears that the US central bank Federal Reserve (Fed) may raise interest rates.

On the Comex division of the New York Mercantile Exchange, the price of spot gold rose by 0.3 percent to $4,315.71 per ounce.

On Monday morning trading, it fell to $4,272.17. This is the lowest in two months. Gold prices also fell by 3 percent on Friday. US gold futures for August delivery also fell by 0.6 percent to $4,341.10 per ounce.

According to market analysts, the expectation that the Fed may raise interest rates has increased after the US employment data appeared strong. This has increased the yield of US Treasury bonds. Which has put pressure on assets like gold, which do not pay interest. The yield on US 10-year Treasury notes has reached a two-week high, reducing investor attraction to gold.

According to analysts, gold is generally considered a safe investment to hedge against inflation, but high interest rates reduce the demand for gold. The market is estimating that there is about a 72 percent chance that the US Federal Reserve will raise interest rates by the end of the year.

According to Cleveland Fed President Beth Hammack, although the US labor market is in a balanced state, persistently high inflation may signal a need to raise interest rates in the near future.

On Monday, silver prices fell by 0.5 percent to $67.47 per ounce. Platinum fell by 0.6 percent to $1,766.70, while palladium rose by 0.3 percent to $1,229.