The US dollar strengthens and expectations of interest rate hikes rise, leading to a decline in international gold prices

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【Global Times Finance Report】According to CNBC and other foreign media reports, as of Thursday local time, international gold prices fell as the U.S. dollar surged and rate-hike expectations in the market warmed up, with prices pulling back from a two-week high during the session.

David Megg, Metals Trading Director at High Ridge Futures, said the market is closely watching developments in the Middle East situation. With the energy situation unlikely to see a rapid resolution in the short term, reduced chances of rate cuts put pressure on gold and silver prices. Oil prices rising lifts inflation expectations and narrows central banks’ room to cut rates. While gold has an inflation-hedging attribute, in a high-interest-rate environment it performs more limitedly due to the lack of interest-bearing returns.

Other influencing factors include the Turkish central bank’s continued reduction of gold reserves. Last week, it cut 69.1 tons to 702.5 tons; over the past two weeks, total reductions exceeded 118 tons, aiming to alleviate market shocks caused by geopolitical conflicts, further affecting market sentiment.

Asian market demand showed divergence: in India, gold trading prices saw a premium for the first time in two months, and the pullback in gold prices boosted buying demand; in the China market, buyers remain on the sidelines, waiting for gold prices to decline further, and the gold premium fell slightly.

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