Gold price is expected to fall by nearly Rs2,000 in the coming weeks amid talks of interest rate hike by the United States Federal Reserve and a strengthening dollar, traders have said.

The precious yellow metal traded at Rs56,000 per tola in the Nepali market last Thursday, and the price has fallen to Rs55,000 this week.

“The price has started to fall because the dollar is gaining strength and the international market is expecting the US Fed to hike interest rates in June,” said Tej Ratna Shakya, special member and former president of the Federation of Nepal Gold and Silver Dealers Association. “The price is expected to reach Rs53000 in June.” Shakya said the international market is expecting the prices to fall by $30-$40 in the upcoming month.

According to international media reports, gold price has fallen to a seven-week low amid expectation that the Fed could raise interest rates as soon as next month. The price of gold, which is largely dependent on interest rates, has fallen to the lowest level since late April.

Gold, a non-yielding asset, is sensitive to interest rates that influence the opportunity cost of holding such assets.

“The price of gold, which was on a continuous rise in line with a fall in non-agriculture employment in the US and fall in global stock markets that prompted safe haven buying, has started to decline,” FENEGOSIDA said in a statement. “If the talks of interest rate hike materialise, gold price can be expected to fall further in the upcoming weeks.”

Meanwhile, profit booking by investors, who sold their stock to tap into the opportunity of rising prices last week, also led to a decline in the prices, the association said.

Silver price has also fallen to Rs760 from Rs780 a week ago.