Gold briefly fell below $4,000 an ounce on Tuesday as investors waited for the Federal Reserve's decision and watched U.S.-Iran diplomacy. Inflation concerns tied to high energy prices keep pressure on the metal.
Gold prices briefly dropped below $4,000 an ounce on Tuesday. Investors were awaiting the Fed's policy decision this week and assessing diplomatic efforts to ease the U.S.-Iran conflict.
At 05:58 ET (09:58 GMT), spot gold had fallen 0.5% to $3,998.23 an ounce, while U.S. gold futures declined 0.6% to $4,013.17 an ounce. Gold had gained 0.5% in the previous session before giving up ground.
Energy prices keep inflation worries alive
Oil prices rose in choppy trading, even as a fresh round of diplomatic efforts raised hopes of preventing a further escalation of the U.S.-Iran conflict. Despite the improved diplomatic outlook, gold remains under pressure from inflation concerns linked to persistently high energy prices.
Traders weigh a Fed hold against a later hike
Traders are eyeing the prospect of the Fed keeping rates unchanged on Wednesday. Markets are pricing in roughly a 10% probability of an interest-rate increase at this week's meeting, although elevated energy prices continue to fuel expectations of a rate hike before the end of the year.
Traders initially increased their bets on an October hike after hotter-than-expected U.S. inflation data. However, comments from central bank officials downplaying the urgency of another borrowing cost increase tempered those expectations. The Fed lifted rates for the first time since 2023 in September.
A further easing in geopolitical tensions could help contain energy costs. Still, sticky inflation may keep the prospect of additional monetary tightening in play.
Source: Investing.com
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