Dollar Strength Weighs on Gold Prices Ahead of Fed Decision

Gold prices declined on Tuesday due to a stronger US dollar, which is making gold more expensive for holders of other currencies. Spot gold fell by 0.6% to $4,051.07 per ounce after rising as much as 1% on Monday.

The dollar held near its one-month high, putting pressure on gold prices. The Federal Reserve's upcoming policy decision is expected to provide clues about the interest rate outlook.

Ilya Spivak, head of global macro at Tastylive, said that 'we're oscillating in this narrow range between $3,950 and $4,200, and I think the market is just waiting for Fed signals.'

Markets are pricing in an 81% chance of a rate hike at the central bank's September meeting. However, some investors expect the Fed to hold interest rates steady.