Home Insights Gold price falls: Is US dollar the culprit? The current movement suggests that the downside for the yellow metal is still limited by Reuters January 27, 2025 Image credit: Getty Images Gold dipped on Monday, January 27, pressured by a firmer dollar, while investors focussed on the Federal Reserve’s first meeting of 2025 for more guidance on the US interest rate path. Spot gold dropped 0.6 per cent to $2,755.80 per ounce, as of 0509 GMT, after trading just below record-high levels on Friday. US gold futures fell 0.7 per cent to $2,760.70. Read: Gold prices soar to 11-week high amid Trump jitters, dollar dip The dollar gained 0.3 per cent, making gold expensive for other currency holders. “The US dollar could be the main culprit for gold’s weakness… However, the current movement suggests that the downside for the yellow metal is still limited, potentially aided by safe-haven flows,” IG market strategist Yeap Jun Rong said. Pakistan strikes gold: New reserves discovered Gold is considered a hedge against geopolitical turmoil and inflation. It also tends to thrive in a low interest rate environment as it yields no interest. Fed policymakers are largely expected to keep rates steady in their January 28-29 meeting, marking the first pause in the rate-cutting cycle that began in September. “Market focus will likely be on how the Fed reacts to comments from President Trump, who has called for continued interest rate cuts,” Reliance Securities’ senior analyst Jigar Trivedi said. Data since the Fed’s December meeting has kept intact the core view among Fed officials that inflation will continue to move steadily, if slowly, towards 2 per cent, with a low unemployment rate and continued hiring and economic growth.
