Gold Slips as Oil Rally Fuels Inflation Fears and Rate Hike Bets

Gold prices declined on Tuesday as concerns about inflation risks grew stronger, bolstering expectations of a Federal Reserve rate hike. The precious metal's value fell 0.7% to $4,266.49 per ounce.

The rally in crude oil prices was a key factor behind the decline in gold prices, according to Saxo Bank's head of commodity strategy, Ole Hansen. He noted that rising oil prices, a stronger US dollar, and higher long-end bond yields were all contributing to the pressure on gold.

Hansen emphasized that a move above $4,440 would be needed to ease the current downside pressure on gold. The US central bank will announce its policy decision at 1800 GMT on Wednesday, with traders pricing in a 92% chance of a 25-basis-point hike, according to the CME FedWatch Tool.

The dollar's strength and rising Treasury yields made greenback-priced bullion more expensive for holders of other currencies. Meanwhile, oil prices rose nearly 2% due to ongoing concerns about supply disruptions following attacks on Saudi Arabian energy infrastructure.