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TD Securities' Head of Commodity Strategy Bart Melek notes that gold recently fell below $4,000 per ounce, driven by higher U.S. interest rates and a stronger dollar. The decline reflects ongoing pressure from monetary policy tightening and reduced demand for non-yielding assets like gold. Analysts warn that further weakness could persist until central banks signal easing, with the Federal Reserve's rate trajectory remaining a critical factor.
The dollar's strength and rising yields are key headwinds for gold, which typically struggles in a high-rate environment. Traders should monitor Fed statements and inflation data for clues on rate direction. A shift in policy expectations could trigger a rebound, but near-term volatility is likely as markets digest economic signals.
For Gulf investors, the decline underscores the importance of hedging against currency risks and diversifying portfolios. Key levels to watch include $3,900 and $3,850 as potential support. The broader commodity market may also face ripple effects if gold's weakness signals waning risk appetite.
