Khaberni - Gold declined on Tuesday, as investors monitor the impact of the conflict in the Middle East and the stalled peace talks between the United States and Iran on the interest rate decision expectations from the central banks meeting this week.
Gold in the spot market dropped 0.2% to $4670.89 per ounce by 03:50 GMT.
The U.S. futures for gold delivery in June also fell by 0.2% to $4684.70.
An American official said that U.S. President Donald Trump is dissatisfied with Iran's latest proposal to end the ongoing war for two months, which weakened hopes for a settlement of the conflict that has affected the flow of energy supplies, exacerbated inflation, and claimed thousands of lives.
Edward Mier, an analyst with Marex, stated, "Geopolitical developments remain the primary driver (of gold prices)."
In case of reaching an agreement (between the U.S. and Iran) or a temporary agreement, the dollar is expected to drop, and gold is likely to rise.
The dollar strengthened, and oil prices hovered above $109 per barrel, as the vital Strait of Hormuz remains nearly completely closed.
The rise in crude prices could stoke inflation by increasing transportation and production costs, which increases the likelihood of interest rate hikes. Although gold is a hedge against inflation, rising interest rates make yield-generating assets more attractive, reducing the appeal of gold.
It is widely expected that the Federal Reserve will keep interest rates unchanged tomorrow, Wednesday, at the end of its two-day meeting.
Investors will also focus on decisions from other central banks this week, including the European Central Bank, the Bank of England, and the Bank of Canada.
As for other precious metals, silver dropped 1.2% in the spot transactions to $74.61 an ounce, platinum remained stable at $1984.19, and palladium fell 0.9% to $1463.
