Gold declines as dollar rises and Fed decision looms

Gold prices fell today as a stronger US dollar weighed on the yellow metal, while investors awaited the Federal Reserve’s monetary policy meeting this week for clues on the interest rate trajectory, including the possibility of future hikes, despite widespread expectations that the Fed will keep rates unchanged this week.

The dollar rose 0.3 percent against a basket of major currencies, hitting its highest level in about two weeks, making dollar-priced gold more expensive for holders of other currencies.

Ricardo Evangelista, director and CEO of Active Trades, said: “Gold remains under pressure due to the strength of the dollar and rising Treasury yields, while persistent inflation concerns, driven by higher oil prices, reinforce expectations that the Federal Reserve will maintain a restrictive monetary policy stance.”

Oil prices rose today, with Brent crude hovering around $116 per barrel, amid renewed Houthi attacks—backed by Iran—on Saudi Arabia, highlighting ongoing supply risks in the Middle East.

Policymakers have signaled they will not raise interest rates this week, but with inflation concerns still prominent, investors believe this pause will not last long.

Global monetary policy expectations remain in focus, as other major central banks also meet this week. The Bank of Japan’s meeting follows the Federal Reserve’s, while the European Central Bank is expected to keep interest rates unchanged on Thursday.

Investors are also awaiting US personal consumption expenditures (PCE) data due tomorrow, a key indicator closely watched by the Federal Reserve as it pursues its 2 percent inflation target.

Evangelista said: “A hawkish message or stronger-than-expected PCE inflation could push gold below $4,000, possibly toward $3,900.”