Fed's Tightening Pressure on Gold Prices

Gold prices took a hit on Tuesday as investors factored in more restrictive monetary policy from the US Federal Reserve (Fed) this year. The Fed has signalled further rate hikes to combat inflation stemming from strong demand and rising energy prices.

The US dollar gained strength, which is typically negative for gold. Traders see a 90% chance of a rate hike in December, up from 80% last week, according to the CME FedWatch Tool.

St Louis Fed president Alberto Musalem and Chicago Fed president Austan Goolsbee have signalled the need for further rate hikes. The move comes after the Fed raised interest rates last week and chair Kevin Warsh flagged more hikes to come in the months ahead.