Brief Gold Market Overview

The decline in gold prices was mainly driven by a stronger U.S. dollar as markets prepared for the Federal Reserve's interest-rate decision and comments from Fed Chair Kevin Warsh. The dollar remained near a one-month high, making gold more expensive for buyers using other currencies and reducing demand for the metal.

The market's expectation of a more hawkish Federal Reserve increased expectations that interest rates could remain high for longer, which supported the U.S. dollar. That made dollar-denominated gold more expensive for international buyers, putting downward pressure on gold prices.

At the same time, oil prices fell from an opening level of around $85 per barrel to as low as $80. However, this decline did not provide enough support for gold to offset the pressure from the stronger dollar and higher interest-rate expectations.

Markets are now focused on the Federal Reserve's policy decision on Wednesday. Traders see a 71% probability that the Fed will leave interest rates unchanged at the meeting, while the probability of a rate hike in September stands at around 75%. Investors will also be watching the U.S. Personal Consumption Expenditures (PCE) price index, due on Thursday, for further signals about inflation and the future path of monetary policy.