Dollar Strength Dents Gold Prices Ahead of Fed Rate Decision
Gold prices fell on Tuesday, weighed down by a strong US dollar and expectations of a potential interest rate hike from the Federal Reserve. Spot gold dropped 0.5% to $4,056.03 per ounce, while US gold futures for August delivery also lost 0.5% to $4,056.70.
The dollar held near a one-month high as traders assessed the chances of a rate hike at the Federal Reserve's upcoming meeting, making greenback-priced bullion more expensive for holders of other currencies. The Fed is expected to hold interest rates steady on Wednesday, but markets are pricing in an 81% chance of a hike at its September meeting.
President Donald Trump called on the Federal Reserve to lower interest rates, saying the US should have the lowest interest rate in the world. Despite his optimism about negotiations with Iran, the country appeared to test the pause in the US military campaign with drone attacks on Saudi Arabia, Jordan, and Iraq.