Gold Dips as Oil Surges and Interest Rate Hike Bets Rise

Gold prices eased back on Tuesday as oil prices surged to multi-week highs, reigniting inflation fears that could prompt the Federal Reserve to raise interest rates. Spot gold fell 0.1% to $4,400.66 per ounce by 1148 GMT, after rising as much as $4,442.70 earlier in the session.

Higher oil prices and expectations for Fed rate hikes put pressure on the precious metal, said Nikos Tzabouras, a senior market analyst at Jefferies-owned Tradu.com. 'Gold trades cautiously today, caught between Fed rate hike bets and dollar softness.'

The US dollar index softened, making greenback-priced bullion more affordable for buyers overseas. However, traders are now pricing in about a 61% chance of an interest rate hike at the central bank's policy meeting, according to the CME FedWatch Tool.