Gold prices fell 1% on Tuesday to a more than one-week low as the dollar firmed, while investors kept a close watch on the U.S. Federal Reserve’s interest rate hike decision and policy outlook.
Spot gold dropped 1% to $1,904.29 per ounce by 1124 GMT, its lowest level since Jan. 19. However, bullion has gained 4.3% so far in January, putting it on course for a third straight monthly rise.
U.S. gold futures were down 1% at $1,904.00.
The dollar rose 0.2% against its rivals, making dollar-priced bullion a less attractive bet.
“Gold prices are feeling the squeeze caused by a strengthening dollar as a build-up of expectations, ahead of this Wednesday’s Fed rate decision and policy statement,” said ActivTrades senior analyst Ricardo Evangelista.
The Fed’s decision is scheduled at 1900 GMT on Wednesday, followed by a press conference from Fed Chair Jerome Powell. The U.S. central bank is widely expected to increase rates by 25 basis points.
Lower interest rates tend to be beneficial for bullion, decreasing the opportunity cost of holding the non-yielding asset.
Analysts and traders have significantly raised their predictions for gold prices but expect high rates to keep a lid on rallies, a Reuters poll showed.
“Key support (for gold) remains at $1,900 where the trendline from the November low and the 21-day moving average meet,” Saxo Bank analyst Ole Hansen said in a note.
Central banks added 1,136 tonnes of gold worth some $70 billion to their stockpiles in 2022, the World Gold Council (WGC) said.
Elsewhere, spot silver slipped 2% to $23.12.
Platinum and palladium each fell 1.4% to $994.69 and $1,615.08, respectively.
Analysts have cut their palladium price forecasts and raised platinum price estimates, as electric and hydrogen-powered vehicles disrupt the auto industry on which both metals rely for demand.
