Gold prices fall amid tightening of US Fed’s monetary policy

Gold prices declined moderately on March 18 morning, mainly in anticipation of further tightening of monetary policy by the US Federal Reserve System (FRS), Report informs referring to the auction data.

The price of April gold futures on the New York Comex exchange fell by $9.25, or 0.47%, to $1,934 per troy ounce. May futures for silver fell 0.79% to $25.415 an ounce.

The decline in gold prices, according to some experts, is due to the fact that investors are still evaluating the Fed's decision to recently raise the discount rate and are trying to predict how the situation around Ukraine will affect inflation and economic development.

At the same time, further tightening of monetary policy can be expected, at least taking into account the fact that the Fed sharply raised its inflation forecast for the current year to 4.3% from 2.6% on March 16.

The tightening of monetary policy in the US is positive for the dollar and, other things being equal, negative for gold. With an increase in the dollar, the precious metal becomes a less profitable acquisition for holders of a different currency.

A moderate strengthening of the dollar is observed now, and this is also already putting some pressure on gold prices - its exchange rate is growing against currencies such as the euro and the yen, and the dollar index (the exchange rate against a basket of currencies of six countries - the main trading partners of the US) is increasing by 0.09%, to 98.06 points.