Gold Falls for the Second Day Under Pressure from Strong Dollar and Tech Stock Sell-Off

SadaNews - Gold fell for the second day, pressured by the strength of the U.S. dollar and a sell-off in stocks led by technology, prompting investors to reduce their holdings of the precious metal and cover losses elsewhere.

Spot gold dropped by as much as 1.2% to below $4,071 an ounce, after losing 1.7% in the previous session, marking its lowest close in two weeks. Treasury bonds rose on Tuesday, and a gauge of the dollar climbed 0.6% so far this week, making the dollar-priced precious metal more expensive.

Christopher Wong, a strategist at Oversea-Chinese Banking Corp, stated that gold prices "are increasingly correlating with real yields."

Although gold is known as a safe-haven investment, it often declines during major sell-offs across the markets as it serves as a source of liquidity. The drop in Wall Street on Tuesday was driven by fears that the AI-driven rally in stocks had become excessive, although Asian stocks later saw a cautious recovery.

Gold Under Pressure from Risk Aversion

The risk-averse sentiment has increased pressures on gold, which is already weighed down by ongoing inflation risks and the growing likelihood that central banks will keep interest rates unchanged or raise them. Higher borrowing costs pose a headwind for non-yielding precious metals.

Additionally, the hawkish tone adopted by new Federal Reserve Chairman Kevin Warsh has rattled investors, undermining the positive impact of the temporary peace agreement between the U.S. and Iran signed last week.

Wong said, "I tend to believe we are close to the peak of hawkishness, but that doesn't mean we can't stay around these levels." He added, "For the hawkish repricing to extend, U.S. incoming data may need to provide an additional upside surprise." The next major inflation indicator, scheduled for release on Thursday, is the U.S. personal consumption expenditure price index, which is expected to show acceleration.

Silver Price

Silver prices are also recorded near $61.