Gold rebounds from a one-and-a-half-week high as geopolitical concerns ease.

Gold prices witnessed a significant drop during trading on Wednesday, retreating from their highest levels in a week and a half, as bullion erased nearly half of the gains from the previous session, resulting in gold prices falling to around $2,620 per ounce.

Current Gold Prices

Spot gold prices decreased by about 0.38% to record $2,621.99 per ounce, while gold futures for December delivery fell by 0.11%, recording $2,628.00 per ounce.

What Affected Gold Prices Today?

Today's drop in gold was influenced by the noticeable rise in the US dollar index DXY – which measures the performance of the US currency against a basket of six other major currencies – after it surged by about 0.42% to 106.58 points, driven by a significant increase in US Treasury yields amid expectations of the potential impact of Trump's economic policies on inflation and US interest rates.

The rise in the dollar increased the cost of holding bullion priced in US currency; leading to apparent sell-offs on non-yielding gold, and prompting investors to turn to higher-yielding US Treasury bonds amidst expectations that the Federal Reserve will slow the pace of interest rate cuts due to the potential effects of Trump's tariffs on inflation.

On the other hand, today's losses in gold followed the yellow metal losing the significant support it received yesterday from rising geopolitical tensions, which faded as investor fears about the recent escalations between Russia and Ukraine eased and Russian President Vladimir Putin announced his approval of easing some nuclear weapons usage requirements for the country, following the US allowing Ukraine to use long-range American weapons to strike Russia.

Some news reports last night indicated that the Russian administration expressed its readiness to engage in discussions about reaching a ceasefire agreement in Ukraine with elected President Donald Trump, ignoring the current administration led by Biden after Biden's administration allowed Ukraine to use long-range American weapons to fire on Russian territory.