Gold Struggles as Dollar Hits One-Month High Ahead of Fed Decision

The price of gold has been struggling to break through the $4,100 barrier since July 14, and Tuesday was no exception. Spot gold traded at $4,045.89 an ounce, with August futures at $4,046.20, both grinding toward the $4,000 handle through the European session.

The dollar's strength is being cited as a key factor in gold's weakness, with the currency sitting at a one-month high. The euro and sterling are also under pressure, with the euro pinned near 1.1300s and sterling at fresh July lows around 1.3270.

A stronger dollar makes bullion more expensive for buyers outside the United States, which is mechanically reducing demand. Typically, falling Treasury yields would support a non-yielding asset like gold, but that's not happening yet due to risk aversion driven by a 10.84% collapse in South Korea's benchmark and a semiconductor rout.

The Federal Reserve's decision on interest rates is expected tomorrow, with market-implied odds of a quarter-point increase standing at 35.8%. The Fed meeting produces no Summary of Economic Projections and no dot plot, leaving the press conference as the only forward-looking input. Traders are waiting for the balance-of-risks paragraph in the statement to see how it affects real yields.