Dollar strength and interest rate expectations lead to a drop in gold prices
Spot gold declined to $4,164.45 amid the strong course of the dollar and interest rate policy expectations ahead of US inflation data.
Gold prices declined on Tuesday as the dollar maintained its strong course and markets awaited signals on the Fed's interest rate policy from upcoming US inflation data.
Current Situation in Gold Prices
Spot gold fell 0.2% to $4,164.45 per ounce. US gold futures for December delivery also dropped 0.1% to $4,187.90.
Impact of the Dollar and Markets
The dollar traded close to the 18-month highs it reached in the previous session. A stronger dollar makes metals priced in this currency more expensive for investors using other currencies.
Inflation Data and Expectations
Markets are focused on the US consumer price index data to be released on Wednesday and the producer price index data to be published on Thursday. Analysts state that if core inflation exceeds expectations, gold could decline further.
Fed Policies and Statements
According to CME FedWatch data, markets are pricing in a 21% probability of the Fed raising interest rates this month, and an 88% probability of a rate hike in December. Cleveland Fed President Beth Hammack stated that a tighter monetary policy stance should be adopted to bring inflation under control.
Geopolitical Developments and Other Metals
Saudi Arabia announced it is facing a new wave of missile attacks and reported that Riyadh Airport will remain closed for now. Among other precious metals, spot silver lost 0.5%, platinum 0.2%, and palladium 0.5% in value.