Gold Tumbles Ahead of Fed Rate Decision Amid US-Iran Conflict Uncertainty

Gold prices declined ahead of the Federal Reserve's interest rate decision on Wednesday. The metal fell by as much as 1 percent to trade near $4,040 an ounce, erasing a modest gain from the previous session.

The market is positioning itself for the Fed's decision, with policymakers divided between June's lower-than-expected inflation reading and the recent increase in oil prices resulting from the US-Iran conflict.

Citadel Securities predicts a quarter-point rate hike this week, which would strengthen Federal Reserve Chairman Kevin Warsh's credibility in fighting inflation. Even if the Fed leaves rates unchanged, a hawkish message or signal of further tightening could support real yields and the US dollar, capping gold's recovery.