Dollar Strength Pressures Gold Ahead of Fed Meeting

Gold prices fell by over 1% on Tuesday to around $4,025 per ounce due to the strengthening US dollar. The greenback reached its strongest level in nearly a month, making gold more expensive for international buyers and reducing global demand.

The precious metal had managed to gain modestly over the previous two trading days but was unable to overcome the pressure from the rising dollar. Gold futures contracts mirrored this weakness, falling to $4,023.45.

Market participants are anticipating a 40% likelihood of an interest rate increase by the Federal Reserve this week and an 80% chance of tightening by September. Rising borrowing costs typically create headwinds for gold as it generates no yield.

The broader metals complex was also under pressure, with silver prices retreating 1.8% to $57.387 per ounce and platinum declining 0.9% to reach $1,611.60 per ounce.