On Tuesday, gold prices fell from the previous day's record levels after comments from Federal Reserve officials cooled investors' expectations of a possible interest rate cut.
The XAU/USD pair fell 0.26% to 2,420.15 over the past 24 hours, with June US gold futures plunging 0.58% to $2,424.30.
Hawkish comments from Fed officials helped boost the dollar and Treasury yields, RTT News reported.
Loretta Mester, head of the Federal Reserve Bank of Cleveland, said the US central bank could raise interest rates if inflation picks up. In addition, she stressed that it is no longer reasonable to expect the Fed to cut interest rates three times in 2024.
Also, Fed Vice Chairman Philip Jefferson said that it is too early to say that the decline in inflation is sustainable and long-lasting. He said that he intends to assess incoming data, the evolving outlook, and the balance of risks to determine an appropriate interest rate stance.
In addition, the head of FRB Atlanta, Raphael Bostic, emphasized that the decline in prices will be slower than expected.
It is worth noting that gold tends to underperform in a relatively high interest rate environment due to the gains investors can make by holding cash or bonds.
However, ongoing geopolitical concerns over conflicts in the Middle East and Ukraine are limiting gold's losses.
Meanwhile, demand for gold from the BRICS central banks as insurance against Western sanctions is another factor supporting the precious metal.
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