XAU/USD falls 1.2% to $4,027 as traders brace for a potential Fed rate hike amid elevated inflation concerns.
Gold prices retreated on Tuesday, with XAU/USD dropping 1.2% to $4,027 after failing to hold above $4,100 in the previous session. The decline comes as the US Dollar strengthened, overshadowing a pullback in oil prices tied to hopes of easing US-Iran tensions.
Markets are now focused on the Federal Reserve’s interest-rate decision on Wednesday, where the federal funds rate is widely expected to remain at 3.50%-3.75%. However, traders assign a 35% probability to a 25-basis-point hike, reflecting heightened uncertainty.
Oil prices extended their decline for a third day, with WTI trading near $80.30, though elevated energy costs continue to stoke inflation fears. Geopolitical risks persist as Iran denied direct talks with the US, despite President Trump’s comments on ongoing negotiations.