International gold prices moved lower on Thursday, retreating from a two-week high during the session, as the U.S. dollar strengthened significantly and market expectations for interest rate hikes intensified.
David Meger, Director of Metal Trading at High Ridge Futures, noted that while markets are closely watching developments in the Middle East, the energy situation is unlikely to see a quick resolution in the near term. Reduced prospects for interest rate cuts are putting pressure on gold and silver prices. Rising oil prices are fueling inflation expectations, limiting the room for central banks to cut rates. Although gold serves as a hedge against inflation, its appeal is constrained in a high-interest-rate environment due to its lack of yield.
In other factors affecting the market, the Turkish Central Bank continued to reduce its gold reserves, cutting holdings by 69.1 tons last week to 702.5 tons. Over the past two weeks, total reductions have exceeded 118 tons, a move aimed at cushioning market shocks from geopolitical conflicts, which has further influenced market sentiment.
Demand in Asian markets showed divergence: gold trading prices in India saw a premium for the first time in two months, as lower prices spurred buying interest. In China, however, buyers adopted a wait-and-see approach, anticipating further price declines, leading to a slight decrease in gold premiums.
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