▲ An employee organizes gold bars at the Samsung Gold Exchange in Jongno-gu, Seoul.
International gold prices plunged more than 3% on Wednesday (local time) as the possibility of interest rate hikes by the U.S. Federal Reserve coincided with a strengthening dollar.
The decline marks an entry into a bear market, having fallen more than 20% from its all-time high in January.
According to Bloomberg and other sources, the spot price of gold in the New York market closed at $3,992.44 per ounce, down 3.0% from the previous day.
During the trading session, the price dipped below $3,960, breaking the $4,000 threshold for the first time since last November.
Gold, which had recorded double-digit growth for three consecutive years, has been on a downward trend since reaching an all-time high of $5,594 per ounce in January.
With this latest drop, the decline from the peak has reached 28%.
A decline of more than 20% from a peak is generally considered the threshold for entering a bear market.
Following remarks by Federal Reserve Governor Kevin Warsh emphasizing the need to curb inflation, concerns over energy-driven inflation stemming from the prolonged U.S.-Iran war have fueled expectations of interest rate hikes, adding downward pressure on gold prices.
Gold, which does not pay interest or dividends, tends to become less attractive compared to interest-bearing assets like government bonds during periods of rising interest rates.
The Bloomberg Dollar Spot Index (BBDXY) has risen nearly 1% this week, reaching its highest level in 13 months.
A strong dollar increases the cost of purchasing gold—which is priced in dollars—for holders of other currencies, thereby dampening demand.
Goldman Sachs lowered its year-end gold price forecast by $500 to $4,900, while Deutsche Bank slashed its fourth-quarter outlook by 17%.
International silver prices also plummeted.
Silver prices fell 6.9% to $57.31 per ounce, dropping below the $60 mark for the first time since last December.
(Photo: Yonhap News)
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