Gold prices experienced a decline on Wednesday due to the strengthening dollar, following recent statements from the U.S. Federal Reserve officials that diminished expectations of interest rate cuts this year.

The spot gold price fell by 0.14% to $1,985.79 per troy ounce, trading close to a two-week low reached on Tuesday.

According to Giovanni Staunovo of UBS, “It appears that some market participants are still anticipating another rate hike from the U.S. Federal Reserve, which is putting pressure on gold.”

Chicago Fed Chairman Austin Goolsbee stated that it is premature to discuss a rate cut, while Cleveland Fed President Loretta Mester mentioned that the central bank has not yet reached a point where it can maintain interest rates at a stable level for an extended period.

Staunovo added, “We still anticipate prices to rise over the next 12 months, with gold expected to reach $2,200 per ounce. However, the next price surge will likely occur when the Fed’s tone becomes more dovish.”

Despite these factors, concerns regarding a potential U.S. default and its economic consequences have helped support precious metal prices.

U.S. President Joe Biden and Republican Congressional leader Kevin McCarthy came close to an agreement on the debt ceiling on Tuesday in an effort to prevent a catastrophic default, although full consensus has yet to be reached.

Palladium experienced a decline of 0.59% to $1,492.88 per ounce, while silver fell by 0.23% to $23.68 per ounce. On the other hand, the price of platinum rose by 1.17% to $1,069.58.

Earlier, we reported that EU authorities predicted Brent price to fall to $72 a barrel in 2024.