Gold is falling as the Fed confirms the path of raising interest rates

Gold prices fell by nearly 1% Thursday, December 15th, after Jerome Powell, Chairman of the Federal Reserve, said that next year will witness more interest rate hikes.

Gold in spot transactions fell 0.9% to $1791.23 an ounce, further retreating from the peak of more than 5 months that it recorded on Tuesday, and US gold futures fell 0.9%, recording $1802.10.

Yesterday, Wednesday, Powell said that the US central bank will adopt more interest rate hikes next year, even though the US economy is sliding towards a possible recession, and he explained that the economy will incur a higher price if the central bank does not curb inflation strongly.

Gold is known as a hedge against inflation, but high interest rates tend to weaken its attractiveness because it increases the opportunity cost of holding non-returnable metal.

The dollar index rose 0.1%, as a stronger dollar makes gold more expensive for buyers from abroad.

As for other precious metals, silver fell 2.7% to $23.24 an ounce, platinum fell 1.1% to $1017.25, while palladium fell 0.7% to $1903.18.