Gold prices declined on Tuesday as the US dollar strengthened, putting pressure on the precious metal. Spot gold fell 0.5% to $3,995.89 per ounce, while US gold futures for December delivery dropped 0.71% to $4,009.60 per ounce. The dollar's rise to a near two-week high made gold more expensive for holders of other currencies, contributing to the decline.
Investors are closely watching the US Federal Reserve's policy decision, expected to leave interest rates unchanged this week. However, markets are pricing in an 80% probability of a rate hike in December, according to the CME's FedWatch Tool. Higher interest rates increase the opportunity cost of holding non-yielding gold, further weighing on its price.
Oil prices also rose on Tuesday, with Brent crude hovering around $116 a barrel, as supply risks in the Middle East persisted. Policymakers have signaled no rate hike this week, but persistent inflation concerns suggest the pause may be short-lived. The Fed's decision on Wednesday could provide clues on whether another rate hike is likely in December.
Other precious metals also saw declines, with spot silver falling 1.4% to $53.16 per ounce, platinum losing 1.8% to $1,499.60 per ounce, and palladium dropping 2.6% to $1,022.87 per ounce. Investors are also awaiting US Personal Consumption Expenditures data due on Thursday, which the Fed closely monitors for inflation targets.