Gold extends decline ahead of US Fed decision

In the international market, spot gold was down 0.2% at $4,289.74 per ounce as of 1552 GMT, after touching its lowest level since August 7 on Monday. US gold futures dropped 0.5% to $4,330.30,. The fall in gold prices came as a stronger dollar and high US Treasury yields reduced the appeal of the non-yielding asset.

A rally in crude oil prices also fuelled inflation concerns and strengthened expectations that the Federal Reserve could maintain a hawkish stance on rates. Adnan Agar, Director at Interactive Commodities, said the gold market was awaiting the US monetary policy announcement and the tone of the Federal Reserve's post-meeting press conference would be crucial for determining its next direction.

"Gold today (Tuesday) reached a low of $4,261, while the market was later around $4,288, with a high of $4,320," Agar said.

He noted that while the market had largely anticipated the US interest-rate decision, investors were closely watching whether the Fed would adopt a dovish or hawkish tone regarding future monetary policy., a dovish stance could initially push gold lower, followed by a recovery.

However, a hawkish outlook, particularly amid persistent inflationary pressures and rising crude oil prices, could increase the likelihood of further decline. Agar said the probability of a downward move appeared somewhat higher in the near term, but the press conference would provide greater clarity.

Despite the recent correction, he described the current decline as potentially the final phase of the downward movement, adding that gold was unlikely to fall below $4,000 even under further selling pressure.