Mubasher: Gold prices saw a slight decline earlier on Tuesday as the dollar climbed to a two-month peak, amid anticipation of the Federal Reserve’s rate decision later this week.

At 7:43 am GMT, spot gold declined by 0.1% to $1,425 per ounce, whereas US gold futures rose by 0.3% to $1,425.10 per ounce.

By 8:54 am GMT, spot gold stabilised at $1,426.87 per ounce, while gold futures jumped by 0.4% to $1,439.40 per ounce

“Liquidity is still thin as traders seem to be holding back before the Fed gives its views on monetary policy,” Phillip Futures analyst Benjamin Lu was quoted by Reuters.

The US central bank would begin its two-day policy meeting later in the day, where it is set to reduce its interest rates by 25 basis points (bps).

“We are also looking at the tone of the Fed speech and how many more cuts are expected” Lu noted, pointing to expectations of two more cuts in the second half of this year.

Moreover, a strength in the dollar was dragging the yellow metal down, Lu noted. The US currency recorded its highest level in two months on Tuesday, making gold more expensive for non-US currency holders, as prospects of aggressive rate cuts faded.

By 8:56 am GMT, the US dollar index, a gauge for the greenback against a basket of six major currencies, ticked up by 0.07% to 98.11.

On the trade front, negotiators from the US and China are due to meet in Shanghai later in the day, but expectations for a breakthrough remained low.