Gold prices could decline even further if the FOMC offers more hints next week that an interest rate hike might be imminent. Earlier this week, Federal Reserve of St. Louis president James Bullard said there is a 50% chance the Fed will raise rates at its FOMC meeting in September. It came days after Fed chair Janet Yellen reiterated that conditions in the economy are likely to justify an interest rate hike at some point this year. Nearly a decade has passed since the U.S. central bank last lifted its benchmark Federal Funds Rate. For nearly six years, short-term interest rates have remained level between zero and 0.25% since the end of the Financial Crisis.
Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in periods of rising rates.