Gold hovers near 4-week low before Fed meeting

Gold prices rose on Tuesday from a four-week low, as a halt in the dollar’s rally and US Treasury yields provided some support, but gains were limited by increasing bets that the Federal Reserve will tighten monetary policy significantly.

And the price of gold in spot transactions rose 0.3 percent to $ 1824.21 an ounce by 0456 GMT, after falling to its lowest level since May 19 at $ 1810.90 earlier in the session.

And US gold futures fell 0.2 percent to $ 1827.80.

The dollar settled near its highest level in two decades on Monday, as the price of the precious metal, priced in the US currency, fell by nearly three percent.

Matt Simpson, chief market analyst at City Index, said a 75 basis point rate hike could put gold under more pressure, even if it later regains its position as an inflation hedge.

On Monday evening, expectations that the Federal Reserve would raise interest rates by 75 basis points 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 US bond yields in the short term increase the opportunity cost of holding non-yielding gold.

Spot silver rose 0.5% to $21.16 an ounce, platinum rose 0.4 percent to $936.77, and palladium rose 0.4 percent to $1804.17.