Gold retreats under dollar pressure as focus turns to US Federal Reserve meeting

Gold prices fell on Tuesday under pressure from a rising U.S. dollar, as markets awaited the Federal Reserve’s upcoming monetary policy decision in search of clues about interest rate expectations.

Spot gold dropped 0.7 percent to $4,044.81 per ounce by 02:50 GMT, after rising about 1 percent on Monday.

“We are oscillating in this narrow range between $3,950 and $4,200, and I believe the market is simply waiting for signals from the Federal Reserve,” said Ilya Spivak, director of global macro research at Financial Content Network “TestaLife.”

The CME Group’s FedWatch tool indicates a 62 percent probability that the Federal Reserve will keep interest rates unchanged, while 38 percent of market participants expect at least a 25-basis-point rate hike, up from 16 percent recorded a week ago.

Markets are pricing in an 81 percent chance of a rate hike at the central bank’s September meeting.

In other precious metals, spot silver fell 1.9 percent to $57.30 per ounce, platinum dropped 1 percent to $1,605.14, and palladium declined 1.6 percent to $1,271.09.