Gold Price Falls as US Dollar Rises Before Federal Reserve Rate Decision
TLDR
- Spot gold dropped over 1% to around $4,025 per ounce on Tuesday
- A near one-month high in the U.S. dollar weighed on gold prices
- Markets price an 80% chance of a Fed rate hike in September
- U.S.-Iran talks eased geopolitical fears, reducing safe-haven demand
- Silver, platinum, and copper also fell on the day
Gold prices slipped on Tuesday as the U.S. dollar climbed to near its highest level in a month, reducing demand for the metal ahead of a key Federal Reserve decision.
Spot gold fell around 1.3% to $4,025.42 per ounce. Gold futures dropped by a similar amount to $4,023.45. The metal had posted small gains in the two sessions before Tuesday.
The U.S. Dollar Index held near a one-month high. A stronger dollar makes gold more expensive for buyers using other currencies, which typically reduces demand.
Fed Decision in Focus
The Federal Reserve is due to conclude its two-day policy meeting on Wednesday. Markets widely expect rates to stay unchanged at this meeting.
However, expectations for future rate hikes have grown. The CME FedWatch tool shows markets are pricing around a 40% chance of a hike this week and an 80% probability of one in September.
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