Gold reaches 2½-year low as dollar stands tall

Gold prices dropped to a new 2½-year low on Monday, weighed down by a sturdy dollar and prospects of further interest rate hikes by the U.S. Federal Reserve to bring down inflation.

Spot gold inched down 0.3 percent at $1,638.59 per ounce, as of 0053 GMT, after hitting its lowest level since April 2020 earlier in the session.

U.S. gold futures declined 0.6 percent to $1,645.8.

Moreover, the dollar index scaled a fresh peak since 2002 buoyed by a hawkish Fed.

prices have dropped more than 20 percent since scaling above the key $2,000 per-ounce mark in March.

Atlanta Fed President Raphael Bostic stated on Sunday he still believes the U.S. central bank can tame inflation without substantial job losses given the economy’s continued momentum.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, decreased 0.31 percent to 947.23 tons on Friday.