Gold falls to its lowest in over a week in world market, at $3,981 an ounce

Gold prices have fallen in the world market to their lowest level in more than a week. On Thursday (November 12), spot gold fell 0.2 percent to $3,981.49 an ounce.

Earlier in the day's trading, gold fell to its lowest level since November 4. US gold futures for December delivery fell 0.3 percent to $3,987.50 an ounce.

The US dollar has strengthened because inflation in the United States was higher than expected and officials of the central bank, the Federal Reserve, hinted at raising interest rates. On Thursday, the dollar reached its highest level in 19 months against the world's major currencies.

As the dollar rose, gold priced in dollars became more expensive for buyers holding other currencies, which has weighed on the gold market.

Market analyst Ilya Spivak said there has been a significant fall in the gold market over the past few days because of the release of US inflation data and expectations of an interest rate rise. But there is uncertainty over whether this downward trend will continue. In his view, gold is now at an important position near $4,000 an ounce.

According to data released earlier on Tuesday, US inflation rose more than expected in October. Against that backdrop, the possibility of the Federal Reserve raising interest rates by half a percentage point next month has strengthened. Policymakers' statements have also hinted at a tighter monetary policy.

Gold is usually considered a safe investment against inflation. But when interest rates rise, the cost of holding a non-yielding asset such as gold increases, reducing its appeal to investors.

Investors are now waiting for the release on Friday of US producer price index (PPI) data. That data could have a fresh impact on the gold market.

Analysts at OCBC Bank said in a report that there is a risk of ups and downs in gold prices in the short term. Oil prices, bond yields and the position of the US dollar will play an important role. But although the macroeconomic situation is somewhat unfavourable, they have not yet turned negative on gold's prospects in the medium term.

The price of another precious metal, palladium, rose 1 percent to $1,037.25 an ounce.