Gold price slumps to two-month low as US dollar rallies

Spot gold declined 0.9% to $1,888.57 per ounce by 12:30 p.m. ET, its lowest in more than two months. US gold futures were down 0.8% to $1,888.70 per ounce in New York.

Meanwhile, the dollar index charged to its highest level since January 2017, fuelled by expectations that the US central bank will be more hawkish than peers and safe-haven flows fanned by concerns over slowing growth in China and Europe.

“There’s a flight to safety right now out of other currencies into US dollar… Gold is going to struggle to rally between now and the Fed meeting,” Bob Haberkron, RJO Futures senior market strategist, told Reuters. The Fed is expected to increase rates by 50 basis points at its May 3-4 policy meeting.

“While the yellow metal’s prices have remained extremely resilient against an aggressively hawkish Fed, as a protracted war in Ukraine simultaneously raised both geopolitical uncertainty and inflation risks and thereby fuelled demand for havens, we see few participants left with appetite to buy gold,” analysts at TD Securities said in a note.