US spot gold and gold futures prices fell to their lowest levels in eight weeks, driven by a stronger US dollar and rising Treasury yields. This was triggered by market speculation about the possibility of an interest rate hike by the US Federal Reserve in the coming months.
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Consumer spending rose 1.8% in January, far exceeding Reuters' forecast of 1.3%, while U.S. inflation also picked up. The uptick in economic figures has reinforced expectations that the U.S. Federal Reserve will remain hawkish on monetary policy.
 

Gold Price Movement

 
Spot gold prices were last down 0.62% at $1,811.30 per ounce, while US gold futures fell 0.48% to $1,818.10.
 

Reasons Why Gold Prices Drop

 
One of the factors that influenced the decline in gold prices was the strengthening of the US dollar exchange rate against other currencies. The US dollar index held near a two-month peak, while benchmark yields were also heading for a fifth weekly increase. This caused investors to choose to switch to other assets that were considered more profitable.
 
In addition, a series of strong economic data has restored expectations of a rate cut this year. Market participants predict that the US interest rate hike will peak in July at 5.35% and remain above 5% until the end of the year. This makes investors more interested in US bonds than gold.
 

Conclusion

 
Gold prices fell to an eight-week low on the back of a stronger US dollar and rising Treasury yields. A string of strong economic data also led investors to expect the US Federal Reserve to remain hawkish in its monetary policy. Therefore, investors tend to choose to switch to other assets that are considered more profitable.

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