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Gold prices retreated from record highs as traders factored in expectations of tighter Federal Reserve monetary policy and a stronger U.S. dollar. The precious metal fell below $2,400 per ounce amid growing speculation that the Fed will prioritize inflation control over economic slowdown concerns. Technical indicators show bears are regaining control after a 12% surge in early 2024.
The dollar's strength against major currencies has amplified gold's challenges, as higher interest rates reduce the metal's appeal as a non-yielding asset. Traders are closely monitoring Fed Chair Powell's upcoming testimony to Congress for clues about rate trajectory. The 200-day moving average at $2,350 now acts as critical support.
For Gulf investors, the dollar-gold relationship is particularly relevant given the region's currency pegs. A sustained break below $2,300 could trigger broader commodity market volatility. Key watchpoints include U.S. nonfarm payrolls data and Fed funds futures pricing, which currently imply a 75% chance of a 25-basis-point hike in July.
