Gold slips as firm dollar weighs; focus turns to Fed meeting

Gold prices dipped on Tuesday, influenced by a stronger U.S. dollar, while investors turned their attention to the Federal Reserve's upcoming policy decision for insights on the interest rate outlook. Spot gold slipped 0.7% to $4,044.81 per ounce by 0250 GMT after surging as much as 1% on Monday. U.S. gold futures for August delivery declined 0.8% to $4,045.40.

The dollar remained near a one-month peak, making dollar-priced gold pricier for holders of other currencies. Market analyst Ilya Spivak stated that the market is "oscillating in this narrow range between $3,950 and $4,200, and I think the market is just waiting for Fed signals." The Federal Reserve will wrap up its two-day policy meeting on Wednesday.

Forecasts suggest a 62% probability of the Fed maintaining interest rates as they are, with 38% of participants anticipating a 25-basis-point rate increase, up from 16% a week ago. Markets are pricing a 81% chance for a rate hike during the September meeting. On Monday, President Donald Trump urged the Fed to reduce interest rates, stating that the United States should have the lowest interest rate globally.

He also mentioned progress in talks with Iran, hinting at a potential deal to resolve their dispute, but warned that strikes could resume if negotiations failed. Iran responded swiftly to the lull in the U.S. military campaign, with Saudi Arabia, Jordan, and Iraq reporting drone strikes on Monday. Spivak added that if the Fed meeting fails to set the stage for a September rate hike, gold may rally above $4,200 per ounce.

Spot silver dropped 1.9% to $57.30 per ounce, platinum declined 1% to $1,605.14, and palladium fell 1.6% to $1,271.09.