The value of gold in the global market dropped due to the rise of the US dollar. The US Dollar Index (DXY) which measures the dollar's strength against six major currencies (EUR, JPY, GBP, CAD, SEK, CHF) increased by 0.37% to 102.780 points. Investors are holding back on investing in gold as they wait for the decision on the US public debt ceiling negotiations. Moreover, the strengthening of the US dollar is adding more pressure on gold prices.
A default by the US government would have severe economic and financial consequences. If a default were to happen, it would cause panic in the stock market as investors sell off their stocks and leave the market, resulting in losses in their accounts.