Gold prices edged lower on Tuesday as a firmer US dollar continued to weigh on investor demand, with markets awaiting the Federal Reserve’s latest policy announcement and comments from Chair Kevin Warsh for fresh signals on the direction of interest rates.
Spot gold fell 0.7% to $4,048.40 per ounce by 07:07 GMT, while US Gold Futures also declined 0.7% to $4,049.10. The precious metal had recorded modest gains over the previous two sessions.
Investors Watch Federal Reserve for Interest Rate Signals
The US Dollar Index remained close to its highest level in nearly a month, making gold more expensive for buyers holding other currencies and limiting demand for the safe-haven asset.
Markets widely expect the Federal Reserve to leave interest rates unchanged when its two-day meeting concludes on Wednesday.
Even so, expectations for further tightening have increased in recent sessions. According to the CME FedWatch tool, traders are assigning roughly a 40% probability to a rate increase this week and an 80% chance of another hike in September.
Because gold does not generate interest income, rising interest rates generally reduce its appeal compared with interest-bearing assets.
Investors also remained on the sidelines ahead of several important US economic releases later this week, including second-quarter GDP data and the Federal Reserve’s preferred inflation indicator.
Analysts said gold is likely to remain rangebound until markets receive greater clarity on the outlook for monetary policy.
Iran Talks Ease Geopolitical Concerns
Geopolitical tensions also remained in focus after US President Donald Trump said Washington was holding “good talks” with Iran, while cautioning that military action could resume if negotiations failed.
The temporary suspension of hostilities between the United States and Iran has helped calm concerns over global energy supplies, reducing inflation expectations in recent days.
Oil prices continued to decline during Asian trading, adding further support to the view that energy-related inflation pressures may ease.
Elsewhere, silver dropped 1.8% to $57.387 per ounce, while platinum fell 0.9% to $1,611.60 per ounce.
Industrial metals were also weaker. London Metal Exchange copper futures slipped 0.6% to $13,677.33 per tonne, while US copper futures declined 0.5% to $6.364 per pound.
Leave a Reply