Gold Slips as Traders Weigh Fed Rate Decision

Gold prices dipped 0.7% to $4,047.22 an ounce in Singapore, as traders weigh the prospects of a potential interest-rate hike by the Federal Reserve this week.

The decline comes ahead of the Fed's decision on Wednesday, which is expected to be a close call between June's tame inflation reading and the recent rise in oil prices due to the US-Iran conflict.

Citadel Securities expects a quarter-point increase, which it believes would strengthen Fed Chairman Kevin Warsh's credibility against inflation.

Even if rates remain unchanged, a hawkish message from the Fed could lend support to real yields and the US dollar, temporarily capping gold's recovery, according to Christopher Wong of Oversea-Chinese Banking Corp.