Gold fell 0.7% to $4,048.40 an ounce on Tuesday as the U.S. dollar held near a one-month high and investors waited on the Federal Reserve’s policy decision. Markets are pricing roughly a 40% chance of a rate hike this week and an 80% probability of a September increase, according to the CME FedWatch tool.
Spot gold fell 0.7% to $4,048.40 an ounce by 03:07 ET (07:07 GMT) on Tuesday. The metal saw marginal gains in the last two sessions. U.S. gold futures slipped a similar amount to $4,049.10. Investors are awaiting the Federal Reserve’s decision and Chair Kevin Warsh’s comments for clues on the outlook for interest rates.
Traders lift bets on a Fed hike
The US Dollar Index traded largely unchanged and hovered near a one-month high, making dollar-priced bullion more expensive for overseas buyers. Markets broadly expect the Fed to leave interest rates unchanged when its two-day meeting concludes on Wednesday.
However, traders have increased bets that policymakers could resume tightening later this year. Markets are pricing roughly a 40% chance of a rate hike this week and an 80% probability of a September increase, according to the CME FedWatch tool. A rate hike tends to reduce the appeal of non-yielding bullion.
Investors also trimmed exposure ahead of key U.S. economic data, including second-quarter GDP and the Fed’s preferred inflation gauge, both due later in the week. Analysts said gold remains trapped in a broad range as investors await clearer guidance from the central bank.
U.S. and Iran hold their pause in hostilities
Meanwhile, U.S. President Donald Trump said on Monday that Washington was having “good talks” with Iran and that there was a chance of reaching a deal, while warning that U.S. military strikes could resume if negotiations failed.
The two sides maintained a pause in hostilities after halting strikes over the weekend, easing fears of supply disruptions and offering some relief to inflation expectations. Oil prices extended sharp losses in Asian trading on Tuesday, alleviating energy-driven inflation worries.
Silver, platinum and copper also retreat
Among other precious metals, silver fell 1.8% to $57.387 per ounce, while platinum dipped 0.9% to $1,611.60/oz. Benchmark copper futures on the London Metal Exchange declined 0.6% to $13,677.33 a ton, and U.S. copper futures fell 0.5% to $6.364 a pound.
Source: Commodities & Futures News
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