Gold price weakens further below $1,700, seems vulnerable near one-year low

 

• Gold price witnesses selling for the second straight day and drops to a nearly one-year low.
• The prospects for a further rise in interest rates continues to drive flows away from the metal.
• A positive risk tone exerts additional pressure; modest USD weakness fails to lend support.

Gold price is extending the overnight breakdown-momentum below the $1,700 mark and is continuing to lose ground for the second successive day on Thursday. The downward trajectory is draging the XAUUSD to its lowest level since August 2021, around the $1,689-$1,688 region during the early European session.

Gold price weighed down by hawkish central banks

The prospects for more interest rate hikes by major central banks is becoming a key factor contributing to driving flows away from the non-yielding gold. The European Central Bank is all set to raise interest rates for the first time since 2011 on Thursday. A Reuters report indicated earlier this week that policymakers might discuss a jumbo 50 bps rate hike move to tackle soaring inflation. The Federal Reserve is also expected to raise rates by another 75 bps at its policy meeting on July 26-27.