The price of gold fell to its lowest level in more than two years on Friday. The depreciation of the precious metal, which has lasted for two weeks, follows a series of interest rate hikes by central banks worldwide to cool inflation.
The price of a troy ounce (31.1 grams) of gold fell 1.8 percent to $1,651. Higher interest rates and a stronger dollar, which continued to appreciate after the US central bank decided to raise interest rates again earlier this week, are making investments in gold less attractive. Other precious metals such as silver, platinum and palladium also fell in price.
The gold price shot up earlier this year due to the war in Ukraine and the turmoil in the financial markets. In uncertain times, investors often try to put their money in deemed safe investments. Gold is then seen as a good way to store value.
Shortly after the Russian invasion of Ukraine in March, the gold price seemed to be heading for the record level of more than $2,000. That level was reached in August 2020, when investors were concerned about the impact of the corona pandemic.
Although higher interest rates and the stronger dollar are putting pressure on gold prices, traders expect the mood to change again soon. Fears of an economic recession and an imminent escalation of the war in Ukraine are seen as possible drivers of the gold price.