Gold Prices Slump as Dollar Turns Positive for the Year

Investing.com – Gold prices languished above year-to-date lows pressured by a rebound in U.S. bond yields from Monday’s weakness and a rally in the dollar to four-month highs ahead of the FOMC rate decision due Wednesday.

for June delivery on the Comex division of the New York Mercantile Exchange fell by $11.50 or 0.87%, to $1,307.70 a troy ounce. The precious metal fell to an intraday low of $1,302.40, just shy of its year-to-date low of $1,302.40.

The remained below 3% but bounced back from weakness seen Monday, while the dollar hit a four-month high, turning positive for the year, keeping a lid on a possible recovery in gold prices.

The selloff in the yellow metal comes as the Federal Open Market Committee two-day meeting got underway, which will conclude with an and the release of a monetary policy statement on Wednesday.

While the Federal Reserve is , it is likely to reaffirm its expectations for further growth and inflation in the near term, paving the way for ongoing gradual rate hikes, according to Stifel.

“The Fed is expected to reaffirm the Committee’s generally positive view of the economy and optimistic expectations for further growth and inflation in the near-term. The statement is, additionally, likely to reiterate the Committee’s intentions to continue to raise rates throughout 2018 at a ‘gradual’ pace,” Sitfel said.

In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds.

In other precious metal trade, fell 1.56% to $16.15 a troy ounce, while fell 0.98%.

fell 1.14% to $3.04.

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