Gold prices dropped to a seven-week low on Wednesday, May 20. Spot gold traded near $4,468 per ounce following a sharp decline in the previous session.
A strengthening U.S. dollar and rising Treasury yields reduced the appeal of the non-yielding metal. Elevated energy prices continue to stoke inflation fears. Markets expect the Federal Reserve to maintain a hawkish stance on interest rates.
Higher interest rates increase the opportunity cost of holding bullion compared to government bonds. Stalled U.S.-Iran talks have kept oil prices high, contributing to inflationary pressures. Investors are awaiting the latest Federal Reserve meeting minutes for future policy signals.