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Gold prices (XAU/USD) fell below $4,600 on Friday amid renewed selling pressure during the European session, reversing a portion of the previous day's modest rebound. The decline reflects growing expectations that central banks, particularly the Federal Reserve and the European Central Bank, will maintain or adopt more hawkish monetary policies to combat persistent inflation. Analysts note that higher interest rates reduce gold's appeal as an inflation hedge, pushing investors toward yield-bearing assets like bonds and equities.
This development is critical for traders monitoring the dollar-gold relationship. A stronger U.S. dollar, often a byproduct of tighter monetary policy, typically weakens gold prices. Additionally, the shift in market sentiment toward risk-on assets could further pressure gold. For commodity traders, the $4,600 level now acts as a key support zone to watch for potential rebounds or deeper declines.
Looking ahead, investors should closely track upcoming central bank statements and inflation data from major economies. A sustained break below $4,600 could signal a broader bearish trend, while a recovery above $4,700 might indicate renewed buying interest. Geopolitical tensions and economic data releases will also play a role in shaping gold's near-term trajectory.
