Gold eases as stronger dollar weighs, Fed meeting in focus

Gold prices slipped in early Asian trading on Tuesday (Oct 27) as the US dollar strengthened, impacting the value of dollar-denominated bullion, while investors awaited the outcome of the Federal Reserve's policy meeting later in the week. Spot gold fell 0.1% to US$4,013.70 per ounce, while US gold futures for December delivery slipped 0.3% to US$4,027.10.

A stronger US dollar makes dollar-priced gold less attractive to overseas buyers. Fed officials indicated they would not raise short-term interest rates again this week, but with inflation concerns persisting, investors believe such a pause in rate hikes won't be permanent. Market participants are waiting for the Fed's decision on Wednesday, along with the release of Personal Consumption Expenditures data on Thursday, a crucial economic indicator closely monitored by the central bank as it aims for a 2% inflation target.

Traders have an 11% chance of a rate hike this week and an 82% chance of a rate increase in December, according to the CME's FedWatch Tool. On the geopolitical front, the Saudi-led coalition in Yemen reported intercepting and destroying three ballistic missiles launched by the Houthis towards Saudi Arabia's Eastern Region early Tuesday.

Meanwhile, top officials from Saudi Arabia, Turkey, and Pakistan met Iranian officials in Tehran on Monday in an effort to ease tensions in the Middle East conflict. In other metals markets, Russia's Nornickel, the world's largest palladium producer, announced a planned furnace overhaul could reduce output of key metals in 2027 and 2028.

Spot silver rose 0.1% to US$53.97 per ounce, platinum remained steady at US$1,527.81, and palladium fell 0.7% to US$1,042.43.