Spot gold declined 1.8% to $4,117.61 an ounce by 02:56 ET (06:56 GMT), while U.S. Gold Futures slipped 1.6% to $4,135.10. The metal\u2019s pullback followed a 0.7% rise in the previous session, which had been supported by optimism surrounding U.S.-Iran peace talks.<\/p>\n
The U.S. Dollar Index remained near the 13-month high reached last week, supported by a hawkish shift at the Federal Reserve\u2019s meeting held last week, the first chaired by Kevin Warsh. While policymakers left the benchmark interest rate unchanged at 3.50%-3.75%, updated projections indicated growing support for at least one rate increase before year-end.<\/p>\n
Futures markets are now pricing about a 90% probability of a rate hike in December, with some investors even anticipating more than one increase as the Federal Reserve maintains a focus on inflation risks. A stronger dollar typically makes gold more expensive for holders of other currencies, while higher interest rates reduce the appeal of bullion because it pays no interest.<\/p>\n
Investor attention also remained on diplomatic efforts between Washington and Tehran. The United States has granted a 60-day sanctions waiver on some Iranian oil sales following initial talks in Switzerland, which U.S. officials described as constructive. Gold, traditionally seen as a safe-haven asset during geopolitical turmoil, has been trading against a backdrop in which investors are increasingly attentive to the inflationary consequences of the Iran conflict.<\/p>\n
Earlier this year, the war pushed oil prices sharply higher, amplifying concerns that energy-driven inflation could compel central banks to keep monetary policy restrictive for longer. Market participants are now awaiting U.S. Personal Consumption Expenditures (PCE) inflation data, due Thursday, which is the Federal Reserve\u2019s preferred price gauge and may further shape expectations for interest-rate policy.<\/p>\n
Among other precious metals, silver prices dropped 4.3% to $62.29 per ounce, while platinum fell 2.6% to $1,639.60 per ounce. In base metals, benchmark Copper Futures on the London Metal Exchange slipped 1.2% to $13,486.33 a ton, and U.S. Copper Futures declined 2.3% to $6.22 a pound.<\/p>\n
Why did gold prices drop on Tuesday?<\/strong> What is the current market expectation for Fed rate hikes?<\/strong> How are U.S.-Iran talks affecting commodity markets?<\/strong> How did other metals perform alongside gold?<\/strong>
Gold prices fell due to a stronger U.S. dollar and increased expectations of Federal Reserve interest-rate hikes, both of which reduce the attractiveness of the non-yielding metal.<\/p>\n
Futures markets are pricing about a 90% probability of a Federal Reserve rate increase in December, with some investors expecting the possibility of more than one hike before year-end.<\/p>\n
Constructive U.S.-Iran talks and a 60-day U.S. sanctions waiver on some Iranian oil sales are being weighed against earlier conflict-related oil price spikes that heightened concerns about energy-driven inflation.<\/p>\n
Silver fell 4.3% to $62.29 per ounce, platinum declined 2.6% to $1,639.60 per ounce, benchmark London Metal Exchange copper dipped 1.2% to $13,486.33 a ton, and U.S. Copper Futures dropped 2.3% to $6.22 a pound.<\/p>\n