Gold and Silver Prices Slide on Stronger Dollar and Interest Rate Expectations

The prices of gold and silver continued to slide on Tuesday as investors awaited the outcome of the US Federal Reserve's policy meeting. The stronger US dollar and rising interest rate expectations weighed heavily on precious metals, while geopolitical tensions eased in the Middle East.

The Comex gold futures contract fell $66 per troy ounce to an intraday low of $4,011, with silver futures tumbling nearly $1.85 per troy ounce to $56.86. The US Dollar Index traded around 101.5 against a basket of major currencies as markets priced in more than a one-third probability of a Federal Reserve rate hike later this year.

The expectations of higher interest rates have strengthened since the outbreak of the US-Iran conflict, keeping precious metals out of investors' favour as they do not offer any yield. Interest-rate swaps currently imply about a one-in-three chance of a quarter-percentage-point rate hike, an unusually high degree of uncertainty this close to a Fed policy decision.