Gold Slumps as Hawkish Fed Tone Fuels Rate Hike Expectations

Gold prices moved lower on Tuesday, falling to $4,029 as of 4:55 p.m. ET, after a decline of 1.22% or $50 from the previous day's close.

The precious metal has been reacting to increasing inflationary pressures driven by rising crude oil prices since March, with traders anticipating at least one interest rate hike by September.

Chairman Kevin Warsh's hawkish tone at his first FOMC meeting has added to market expectations of higher interest rates, with roughly two-thirds of the market expecting rates to remain unchanged and about one-third expecting a 25-basis-point hike.

The combination of higher oil prices and a stronger dollar has kept gold trading within a bearish descending triangle pattern for five months, during which time the U.S. dollar index has risen by approximately 3.8%.