Gold prices fall as investors expect prolonged high interest rates

Gold prices fell on Tuesday as investors assessed the possibility that major central banks will keep interest rates higher for an extended period in an effort to contain persistent inflation.

Spot gold dropped 0.6 percent to 329.31 dollars per ounce, while US gold futures for December delivery slipped 0.2 percent to 366.90 dollars.

According to Reuters, Kyle Rodda, a financial markets analyst at Capital.com, said short-term volatility in gold is largely driven by oil trading and developments in the Middle East. However, he noted that the long-term fundamentals supporting gold remain very strong.

Last week, the US Federal Reserve raised its benchmark interest rate by 25 basis points to a range of 3.75 to 4 percent and signaled the possibility of another hike before year-end. The Bank of Japan and the European Central Bank have also recently increased interest rates.

Reuters also reported that analysts at BMI maintained their average gold price forecast for 2026 at 400 dollars per ounce, citing expectations that elevated geopolitical risks and continued central bank purchases will provide strong support for gold prices near the 800 dollar level.

Among other precious metals, spot silver fell 1.2 percent to 66.24 dollars per ounce, platinum lost 1.4 percent to 807.80 dollars, and palladium declined 1.1 percent to 293.68 dollars.