New Delhi: Gold prices could face further pressure in the coming weeks as a stronger US dollar, rising Treasury yields and expectations of prolonged monetary tightening in the United States continue to weigh on investor sentiment, the World Gold Council (WGC) has said.
According to the WGC, the London Bullion Market Association (LBMA) Gold Price PM declined 0.8 per cent last week to around $4,151 per ounce, extending its recent losses and leaving the precious metal nearly 5 per cent lower so far this year.
The council said investors are increasingly pricing in a “higher-for-longer” interest-rate environment following signals from the US Federal Reserve that inflation remains a key concern. A stronger dollar and higher bond yields typically reduce the appeal of non-yielding assets such as gold.
“The US Dollar Index (DXY), taking its cue from the Fed’s hawkish pause, higher bond yields across the curve and stronger equities, broke comfortably above 100 last week,” the WGC said in its latest market update.
The council noted that sustained dollar strength could exert additional pressure on gold prices, particularly if inflation remains elevated and US economic data continues to show resilience, reducing the likelihood of aggressive rate cuts.
The June meeting of the Federal Open Market Committee (FOMC) reinforced expectations that borrowing costs could remain elevated for longer than previously anticipated. According to the WGC, about half of Fed policymakers appear inclined toward a tighter policy stance to bring inflation under control.
The report also highlighted a key technical support level at $4,075 per ounce. Analysts warned that a decisive break below this level could trigger further selling and deepen the correction.
Despite the bearish outlook, the WGC said ongoing geopolitical tensions, particularly in the Middle East, and continued safe-haven demand are helping limit losses. Global gold exchange-traded funds (ETFs) also recorded net inflows during the week, indicating that some investors continue to view gold as a hedge against uncertainty.
The council said gold remains caught between competing forces, with monetary policy and dollar strength weighing on prices while geopolitical risks and safe-haven demand continue to provide support. Future movements in the US dollar and Federal Reserve policy are likely to determine the metal’s near-term direction.
