Expectations of continued rise in interest rates put pressure on gold

The price of gold has stabilized just below the 1800 level. Against the backdrop of potential recession risks and higher interest rates in the coming year, investors are switching to the U.S. dollar. At the same time, the metals market is also under pressure.

This week, the U.S. dollar is trading steadily against a basket of currencies. This year, gold has considerably ceded its status of a defensive asset to the U.S. dollar. Therefore, gold prices are under pressure amid a significant shortage of bids.

A number of hawkish statements by the Fed last week, predicting a continuation of the interest rate hike cycle into 2023, is having a significant impact on gold and other metals. This is due to an increase in the opportunity cost of holding non-yielding assets because of rising interest rates.

Investors' worries are also related to a possible recession in the coming year, caused primarily by soaring inflation and rising interest rates.

In the absence of other signals, the focus on slowing economic growth will determine the last two trading weeks of this year. Along with this, due to the forthcoming holidays, trading volumes will be reduced.