Gold prices slip 1% as US dollar advances

Gold prices dropped today, May 9, due to a firm increase in the US dollar, as the precious metal has an inverse relationship with the greenback.

Gold futures for June delivery fell by 1%, to $1,863.70 per ounce at 12:38 pm Makkah time. Spot price also fell by 1.01% to $1,864.60 per ounce.

While gold is seen as a safe store of value during political and economic crises, it is highly sensitive to rising US interest rates and bond yields, which raise the opportunity cost of holding ounces.

The US dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.38% to 104.049 points. In addition, the benchmark 10-year US treasury yields rose by 6.3 points to 3.187%.

After the recent decision of the Federal Reserve to raise interest by 50 basis points, investors are on the watch for the inflation data for April, to be released by May 11, because of their significant impact on dollar movement and, therefore, on the yellow metal.