Dollar Strength Weighs on Gold Prices Ahead of Fed Decision

Gold prices edged lower on Wednesday as the dollar held firm and market participants awaited the Federal Reserve's policy decision for clues on inflation and interest rates. The Fed is expected to hold interest rates steady, with a 70% chance of no change and a 30% probability of at least a 25-basis-point increase.

The dollar was near a one-month high, making gold more expensive for holders of other currencies. This reduced demand and contributed to the decline in prices. Spot gold fell 0.1% to $4,021.87 per ounce, while US gold futures lost 0.4% to $4,021.70.

The market is pricing in a 76% chance of an interest rate increase in September. Commerzbank lowered its year-end gold price forecast to $4,500 per troy ounce and expects silver to reach $67 per troy ounce by the end of the year. Spot silver gained 0.1% to $57.20 per ounce.