Gold prices slumped to their lowest in more than six months on Tuesday, as the US dollar rallied amid growing recession concerns that caused losses across risk assets.
Spot gold dropped 2.2% to $1,767.93 per ounce by 2:50 p.m. ET, the first time it has fallen below $1,800 since mid-May. US gold futures were down 1.9% to $1,767.60 per ounce in New York.
[Click here for an interactive chart of gold prices]
US stocks also slumped on Tuesday with growing fears that the Federal Reserve’s rate hikes to damp inflation could cause a slowdown in the economy.
Meanwhile, the dollar surged to its highest in about 20 years as investors, worried about a potential recession, retreated to the haven asset over its alternatives like bullion.
“There are more attractive alternatives” to gold in the rising interest rate environment, said Chris Gaffney, president of world markets at TIAA Bank.
“The near-term technicals for gold and silver are fully bearish, which is also inviting the technically based speculators to play the short sides of the futures markets,” Jim Wyckoff, senior analyst at Kitco Metals, told Reuters.
Investors now await minutes from the Fed’s June meeting on Wednesday for new clues on the likely magnitude of rate hikes in the coming months.
(With files from Bloomberg and Reuters)