Gold Prices Slump as US Dollar Strengthens Ahead of Fed Meeting

Gold prices continued their downward trend on Tuesday as the US Dollar (USD) strengthened ahead of the Federal Reserve's (Fed) two-day policy meeting. Despite some follow-through selling, the downside potential for gold appears limited due to the Fed's uncertain stance on interest rates.

The US Dollar gained traction after renewed hopes for a resolution in the Iran conflict and subsequent easing of inflation fears. This led to a slump in oil prices, which in turn supported the safe-haven USD. President Donald Trump's comments on Monday suggested that there was a chance of resolving the situation through diplomatic means.

However, concerns about disruptions to global energy supplies remain, and traders are cautious ahead of the Fed meeting. The outcome is expected to have a significant impact on interest rates, which could in turn influence gold prices. As a result, investors are opting to wait for the outcome before making any aggressive bets.