Gold prices plunge to lowest level in almost 7 weeks on strong dollar

Gold, dollar

Prices of the yellow metal have fallen to their lowest level in more than seven weeks, driven down by concerns about inflation and rising bond yields.

At the time of writing this post, the price of gold had fallen below $1,740 per ounce, having fallen to $1,726.19 on Tuesday, its lowest price since August 11.

The dollar fell on Wednesday, a day after it had risen for over ten months in a row, but it was still close to its day before high.

Even though the benchmark 10-year yield surged to its highest level since June on Tuesday, a barometer of the greenback was near its best position since November.

Janet Yellen and Jerome Powell, both members of the Senate Banking Committee, maintained in the hearing that the U.S. inflation problem is temporary and will disappear once expansive monetary liquidity has been resolved.

As James Bullard, the president and CEO of the Federal Reserve Bank of St. Louis, stated, the Fed Bank of St. Louis should be prepared in the event that pricing pressures persist for a more extended period than anticipated. Lael Brainard, a senior Federal Reserve official, stated earlier this week that the labour market might soon satisfy her criterion for reducing asset purchases, albeit further supply limitations could increase inflation concerns.

A growing number of central banks are signalling their intention to scale back their stimulus programmes, causing the price of gold to fall to its lowest level since June. Powell claimed that the Federal Reserve would begin rewinding asset purchases in November and finish the process by 2022.

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