Strengthening US dollar and Federal Reserve policy expectations likely to cause weekly decline

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智通财经2026/09/25 01:36

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On Friday, gold prices rebounded slightly, supported by dip buying, currently trading near $4,285.35 per ounce with an increase of about 0.25%. However, a weekly decline seems likely, mainly due to a strong U.S. dollar and expectations that the Federal Reserve will maintain higher interest rates for longer to combat inflation. The cumulative loss for this week has already exceeded 2%.
The U.S. dollar is expected to strengthen this week, making dollar-denominated precious metals more expensive for holders of other currencies. Two Federal Reserve officials stated that to curb excessively high inflation, another rate hike in the United States might still be necessary. In the previous week, the Federal Reserve raised its benchmark interest rate by 25 basis points.
Philadelphia Fed President Anna Paulson said returning inflation to 2% is the top priority, and she will support policy paths that can achieve this goal while carefully assessing risks to the labor market. New York Fed President John Williams also hinted at a possible further tightening of monetary policy during a speech in London.
Gold is commonly regarded as an inflation hedge, but rising interest rates make interest-bearing assets more attractive, thereby dampening demand for gold. Data shows that initial jobless claims in the U.S. last week were close to a 57-year low, indicating that the labor market regained momentum after fluctuations during the summer and has so far withstood the pressure from the Middle East conflict.
According to informed sources, U.S. and Iranian negotiators are exploring phased paths to end the war in discussions in New York. These include Iran reopening the Strait of Hormuz and the U.S. lifting economic sanctions on Iran.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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Strengthening US dollar and Federal Reserve policy expectations likely to cause weekly decline

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