Precise Investors Editorial Team
Spot gold dropped 1.4% to $4,131.61 an ounce
Gold prices dropped more than 1% in Asian trade on Tuesday as a firmer U.S. dollar and rising expectations of U.S. rate hikes this year dented demand for the non-yielding metal, while investors also weighed progress in Iran-U.S. peace negotiations.
Spot gold dropped 1.4% to $4,131.61 an ounce by 03:22 GMT.
The yellow metal added 0.7% in the previous session over optimism about Iran-U.S. peace talks.
The Dollar Index held near a 13-month high hit last week.
The dollar has drawn support from a hawkish shift at last week’s U.S. central bank meeting, the first chaired by Kevin Warsh.
While policymakers left interest rates unchanged at 3.50%-3.75%, updated projections showed growing support for at least one rate increase before year-end.
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 policymakers remain focused on inflation risks.
A stronger dollar makes gold more expensive for holders of other currencies, while higher interest rates reduce the appeal of bullion because it pays no interest.
Investor attention also remained on diplomatic efforts between Tehran and Washington. The U.S. has agreed to a 60-day sanctions waiver on Iranian oil sales following initial talks in Switzerland, while the country’s officials described the discussions as constructive.
While gold is traditionally viewed as a safe-haven asset during periods of geopolitical turmoil, investors have increasingly focused on the inflationary consequences of the Iran war.
The war drove oil prices sharply higher, raising concerns that energy-driven inflation could force central banks to maintain restrictive monetary policy for longer.
Among other precious metals, silver prices slid 3.3% to $62.93 per ounce, while platinum dropped 2.2% to $1,646.60/oz.
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