Gold prices dipped in early Asian trading on Tuesday as investors braced for the US Federal Reserve's policy decision next week. The move will set the tone for interest rates and broader monetary policy. Spot gold fell 0.3% to $4,126.84 per ounce by 0102 GMT, while US gold futures for December delivery dropped 0.3% to $4,146.00.
Market attention is now focused on the Fed's October 27-28 meeting and next week's US Personal Consumption Expenditures (PCE) data, a key inflation gauge. The Fed raised rates to 3.75%-4.00% in September. Traders currently see an 83% chance of no change next week, but a 94% likelihood of a hike in December, according to CME's FedWatch Tool.
Bank of Japan Governor Kazuo Ueda noted that underlying inflation is nearing the central bank's 2% target, with global AI demand adding to inflationary pressures. Higher interest rates typically hurt gold prices by increasing the opportunity cost of holding non-interest-bearing bullion.
Geopolitical tensions also weighed on markets after Yemen's Houthis claimed attacks on Saudi energy, airport, and military targets. Other precious metals saw declines, with spot silver down 0.7% to $56.69 per ounce, platinum steady at $1,639.65, and palladium dropping 0.7% to $1,112.08.