Gold prices fell in Asian trade on Friday, retreating further from record highs hit this week as a sharp uptick in the dollar, following a surprise interest rate cut by the Swiss National Bank, pressured metal markets.
The yellow metal had surged to record highs above $2,200 an ounce after the Federal Reserve maintained its outlook for at least three interest rate cuts in 2024. But the yellow metal spent little time at these highs, as the dollar rebounded sharply on dovish signals from other major central banks.
Spot gold fell 0.4% to $2,173.62 an ounce, while gold futures expiring in April fell nearly 0.5% to $2,174.90 an ounce by 00:28 ET (04:28 GMT).
Dollar strength pressures gold as major c.banks wax dovish
Pressure on gold came chiefly from sharp gains in the dollar, with the dollar index hitting a three-week high above the 104 level.
The greenback shot up as a surprise rate cut from the SNB, coupled with dovish signals from the Bank of England, left the greenback as the only major high-yielding, low risk currency.
Signs of resilience in the U.S. economy- following an upbeat outlook from the Fed and strong purchasing managers index data- also kept traders geared heavily towards the dollar.
This notion pressured metal markets, given that investing in precious metals such as gold offers no direct yields.