Gold gave up small gains in a narrow trading range, on Tuesday, as the dollar resumed its rally and reached a new high in 20 years, reducing the attractiveness of the precious metal as a safe investment while investors bet on active interest rate increases from the US Federal Reserve.
And gold fell in spot transactions 0.6 percent to $ 1807.10 an ounce by 2000 GMT.
US gold futures fell 1.2 percent to $1,809.70 an ounce.
“The main thing driving gold now is expectations for an active increase (in interest rates) from the Federal Reserve tomorrow given the recent inflation data,” said Bob Haberkorn, chief market analyst at RJO Futures.
The dollar rose once morest a basket of currencies to its highest level in two decades, which makes gold more expensive for holders of other currencies.
On Monday evening, expectations for the Federal Reserve to raise interest rates by 75 basis points at the conclusion of its meeting on Wednesday jumped to 96 percent from 30 percent earlier in the day. The 75 basis point hike would be the largest since 1994.
Higher interest rates and short-term US bond yields increase the opportunity cost of holding non-yielding gold.
Among other precious metals, spot silver fell 0.45 percent to $20.97 an ounce, while platinum fell 1.7 percent to $917.02. Palladium rose 0.8 percent to $ 1811.00 an ounce.
(Archyde.com)