Gold prices are facing competing forces as a stronger US dollar and expectations of further US interest-rate hikes weigh on the precious metal. Spot gold fell 0.4% to USD 4,327.74 an ounce on September 22, while US gold futures declined 0.4% to USD 4,364.90.
The latest move keeps bullion within a broad USD 4,000-USD 4,500 zone that market participants are watching closely. The World Gold Council earlier projected that gold could remain broadly range-bound around USD 4,100 in the second half of 2026. Reportedly, higher risks could push prices towards USD 4,500-USD 5,000.
The US dollar remains an important headwind for gold. The dollar index briefly climbed to a seven-week high on Tuesday, September 22, before giving up some gains. Expectations of additional Federal Reserve rate increases supported the greenback and increased pressure on non-yielding assets such as gold.
The Federal Reserve raised its policy rate by 25 basis points last week. Fed officials have since signalled that further increases could be necessary to contain inflation. Markets are now pricing a higher probability of another rate increase in December.
Higher interest rates can reduce gold's appeal because the metal does not generate interest income. A stronger dollar also makes dollar-priced bullion more expensive for buyers using other currencies.
Gold continues to receive support from geopolitical uncertainty. Tensions in the Middle East and uncertainty surrounding oil supplies remain important factors for investors seeking defensive assets.
However, safe-haven demand did not translate into a sustained rally because dollar strength and higher yields are offsetting some of that support. Recent movements in oil prices have also altered expectations around inflation and US monetary policy.
Indian investors are also watching the global move closely. Gold had fallen more than 7% from its August peak by September 22, although domestic investment demand remained relatively firm. Indian gold ETF inflows rose 67% in August to Rs. 26 billion.
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