![gold bar](https://d.latintimes.com/en/full/475858/gold-bar.jpg?w=736&f=a05e9b1006b78d923f8fedb2e00ceb61)
The price of gold continued to drift around the yearly lows on Tuesday, Oct. 11, after it made a steep fall. The overall US dollar strength is causing the metal to behave in such a manner. Both the gold futures and gold spot fell around 2% on Monday, Oct. 10, which has been the worst drop for the instruments over the past two weeks.
According to Lael Brainard, the Federal Reserve Vice Chair, the damages due to the recent rate hike is yet to be felt. She emphasized the need for a restrictive monetary policy, reports said.
She said "There is clarity that monetary policy will be restrictive for some time until there is confidence inflation comes down... The (Federal Open Market) Committee has said policy rates will increase further."
"We also will be learning as we go and that assessment will reflect incoming data and also risks domestically and globally ... The actual policy path will be data-dependent." Brainard added.
Her comments led to a boost in the dollar which caused a drastic selloff across most asset classes. The worsening Russia-Ukraine conflict also gave the dollar a safe-haven demand which gave it further support. On the other hand, gold has seen very limited buying as an instrument to escape inflation this year, apart from the early days of the conflict.
In the past week, Federal Reserve officials talked again about their commitment to bringing inflation to the 2% target.
Meanwhile, major central banks in Europe and Asia have also begun to introduce rate hikes as a mechanism to fight inflation which is already out of hand. This is expected to have a major impact on gold and other precious metals in the near term.
The rising interest rates have led to gold prices dropping from annual highs. The fears of a possible fall in demand due to slowing economic growth across the world have led to copper falling sharply this year. But China the largest importer of copper in the world hasn't shown any signs of such a slowdown. The local buyers of the metal in China have used the recent decline in prices as an opportunity to build up their supply.
© 2024 Latin Times. All rights reserved. Do not reproduce without permission.