Gold declines on higher dollar, markets focus on Fed meeting

Gold is heading for gains for the third month in a row despite a decline in its prices on Tuesday, with the dollar rising ahead of the Federal Reserve (US central bank) monetary policy meeting that begins later on Tuesday.

According to Reuters, by 0632 GMT, gold in spot transactions fell 0.6 percent to $2,320.54 per ounce. US gold futures fell 1.1% to $2,331.10.

The dollar index rose 0.3%, making the yellow metal priced in the US currency less attractive to holders of other currencies.

Kyle Rodda, a financial markets analyst at Capital.com, said: “I think we are starting to see gold prices return to those basic levels. The dollar is rising and bond yields are rising after geopolitical risks recede, and there are some downside risks with the possibility that the Federal Reserve will adopt a hawkish tone in monetary policy.”

Gold has gained about 4% so far this month, supported by strong purchases from central banks and flows towards safe havens amid geopolitical tensions.

Markets are awaiting the Federal Reserve’s monetary policy meeting, which begins Tuesday and ends Wednesday, as well as non-farm payrolls data scheduled for release on Friday. The Federal Reserve is expected to keep the benchmark interest rate unchanged in a range between 5.25 and 5.5 percent at this meeting.