On Tuesday, gold prices fell as rising crude oil prices heightened concerns about inflation. This, in turn, boosted expectations of a rate hike by the Federal Reserve and led to higher Treasury yields, which were already in place before this week’s Fed policy meeting. After plunging to its lowest point since August 7 on Monday, spot gold was down 0.7% at $4,266.49 per ounce as of 0853. “The pressure on gold reflects a combination of rising oil prices, a U.S. rate hike on Wednesday being almost fully priced in, a stronger dollar and, not least, long-end bond yields reaching higher levels,” said Ole Hansen.

“A move back above $4,440 would, in our opinion, be needed to ease the current downside pressure.” Wednesday at 1800, the Federal Reserve will announce its policy decision. Traders are currently estimating a 25 basis point raise to be 92% likely, according per the CME FedWatch Tool. Standard 10-year U.S. Treasury yields hit a new high, surpassing 2007 levels, as the currency strengthened, causing holders of foreign currencies to pay a premium for greenback-priced gold. Gold is typically considered as a safe haven against inflation and geopolitical dangers, but its attraction wanes when rates rise since holding onto the non-yielding precious metal becomes costlier.

The assaults on Saudi Arabian energy infrastructure knocked the kingdom’s East-West pipeline offline and threw doubt on attempts to reduce shipping dangers in the Gulf, leading to a nearly 2% increase in oil prices due to ongoing shortage worries. Officials in Yemen reported that the Houthis, who are aligned with Iran, had begun a fresh round of attacks against Saudi Arabia and were fortifying their positions along the Red Sea coast in West Yemen. Spot silver prices dropped 0.7% to $62.80, platinum prices down 1% to $1,742.74, and palladium prices dropped 1.1% to $1,282.79.