As of Thursday, the price of gold increased by around 0.1 per cent, moving up to $1,673 per ounce, appearing to stabilise after fluctuating somewhat the previous day.

However, with the US Federal Reserve utilising tools to tighten its monetary policy to further tackle rising inflation, the gold market is still under pressure, said PP Link Securities business manager Chhea Chhayheng.

Kitco News’ Neils Christensen on Wednesday reported: “Although the US central bank sees growing downside risks to the economy, the minutes of the September monetary policy meeting show that the committee remains focused on bringing inflation down by raising interest rates.

“‘Participants reaffirmed their strong commitment to returning inflation to the committee’s two per cent objective, with many stressing the importance of staying on this course even as the labour market slowed,’ the minutes said.”

Kitco News’ Anna Golubova reported US Treasury Secretary Janet Yellen approving of the dollar rally, which signals further gains for the greenback while gold faces another significant drop in the short term.

“Gold is now stuck below $1,700 per ounce, and there is a growing risk of a drop below $1,600 per ounce.

“The main drivers suppressing gold’s price action include the aggressive tightening by the Federal Reserve and the US dollar index trading near 20-year highs.

“On top of the already immense gains of 18 per cent year-to-date, the US dollar advance received a further endorsement from Yellen, who described it as a ‘logical outcome’ in light of what the Fed is doing compared to other central banks,” Golubova said.

The Kitco News market reporter quoted Yellen in an interview with CNBC on Tuesday as saying: “A market determined value of the dollar is in America’s interest. The currency movements are a logical outcome of different policy stances.”

Golubova said: “Yellen was responding to whether US officials needed to intervene to halt the greenback’s move higher. She also described the current US dollar strength as ‘appropriate’.”

Based on the technical analysis, the price of gold may drop to $1,600 per ounce if it breaks below $1,660 per ounce. Bearish signals suggest the declining price could reach $1,600 per ounce.

The next resistance level would be at $1,730 per ounce were the $1,700 per ounce barrier to be broken.