Gold Bounces but Remains Near Seven-Week Low as Fed Rate Hike Looms

Gold prices rose on Tuesday but failed to break free from their near-seven-week low due to expectations of tighter monetary policy from the Federal Reserve. The US central bank's interest rate hike bets kept gold in check, despite a 0.3% gain to $4,179.70 an ounce for December futures.

The precious metal had fallen as low as $4,112.97 during the session, just over $2 above Monday's more than seven-week low of $4,110.55. The drop was attributed to a stronger US dollar and higher Treasury yields, which increase the opportunity cost of holding non-yielding bullion.

The Federal Reserve is seen raising interest rates in October with a 70% probability and another hike in December at a 95% chance, according to the CME FedWatch Tool. This has led investors to reassess their portfolios and opt for yield-bearing assets over gold.