Gold Slips on Oil-Driven Inflation Fears Ahead of Fed Decision

Gold prices have declined after a surge in oil prices sparked inflation concerns and reinforced expectations that the Federal Reserve could raise interest rates for the first time since 2023 this week.

The increase in US Treasury yields and a stronger dollar added to gold's decline, with market participants reducing their exposure ahead of Wednesday's Fed decision.

Despite the hawkish Fed repricing already being reflected in current levels, bullion may remain under pressure if policymakers signal that interest rates will stay higher for longer.

Persistent geopolitical risks and worries about the economic drag from elevated energy prices could continue to support demand, however.