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Gold Prices Decline Amid Federal Reserve’s Hawkish Comments

by Barbara Miller

Gold prices (XAU/USD) fell on Wednesday, ending a three-day winning streak, due to a modest rebound in the US Dollar (USD). This decline followed hawkish comments from several Federal Reserve officials and stronger-than-expected US economic data, which reduced expectations for a Fed rate cut in September. The strengthening USD weighed on gold prices, which are denominated in the currency.

Despite this downward pressure, ongoing geopolitical tensions and economic uncertainty continue to support gold as a safe-haven asset. Additionally, increased demand from central banks is expected to sustain higher gold prices in the near term.

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Investors are closely watching the Fed’s Beige Book and a speech by Fed official John Williams, both scheduled for Wednesday. The upcoming release of the US Core Personal Consumption Expenditures (Core PCE) Price Index on Friday is also drawing significant attention. This index, a key inflation measure, is projected to rise by 0.3% month-over-month and 2.8% year-over-year for April. Persistent inflationary trends could delay a Fed rate cut, potentially increasing the opportunity cost of holding gold and exerting further downward pressure on its price.

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