Gold prices fell below the key $1,700 level for the first time since July on Thursday, as a stronger dollar and expectations of aggressive interest rate hikes dented its appeal.

Spot gold was down 0.8% at $1,696.76 an ounce as of 1:58 pm. ET earlier fell to its lowest point since July 21. US gold futures ended down 1% at $1,709.3.

Gold is considered a safe store of value during economic uncertainty, but a higher interest rate environment tends to hurt the asset as it pays no interest.

“If the Fed sticks to its inflation mandate and keeps interest rates high and doesn’t cut rates even in a recession, that doesn’t bode well for gold,” said Daniel Ghali, commodity strategist at TD Securities.

“If gold prices break below the $1,675 range, we expect significant selling pressure.” Reflecting investor sentiment, holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 31,294,673 ounces on Wednesday, the lowest level since January.

The US dollar index surged to its highest level in 20 years after data showed US manufacturing grew in August and US jobless claims fell last week, giving the Federal Reserve more room to raise interest rates sharply.

A stronger dollar makes gold more expensive for overseas buyers. US Treasury yields also rose, increasing the opportunity cost of holding non-yielding bullion.

Spot silver fell 1% to $17.99 after hitting its lowest level in more than two years. Platinum fell 2.4% to $825.61 an ounce, while palladium lost 3.5% to $2,011.48.

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“Industrial metals prices are particularly vulnerable as we are facing a recession,” Gurry added. Factory activity in Asia fell in August as lockdowns in China and cost pressures continued to hurt businesses, the survey showed.