Gold prices edged lower on Wednesday, dropping to $1,710 per ounce. If gold prices decline, support may be found at $1,680 per ounce, while resistance may be found around 1,802 per ounce and higher up at $1,870 per ounce.
Gold has been retreating, pushed down by the rise of competing assets, such as the dollar and US treasury yields. The dollar remained strong on Wednesday, with the dollar index near 108.8 after reaching 109 earlier in the week. The US 10-year treasury note climbed above 3.1%, boosted by increased Fed rate hike expectations.
Fed rhetoric remains firmly hawkish, indicating that the Fed is committed to increase interest rates until inflation has been brought under control. On Wednesday, FOMC member Loretta Mester stated that she sees the Fed benchmark interest rate rising to 4% and no rate cuts through 2023, propping up the dollar.
The pivot of most major Central Banks toward a tighter monetary policy to combat rising inflation rates is putting pressure on the price of gold. Assets yielding interest become a more appealing investment compared to gold, as interest rates rise.
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