Gold and silver slide as stronger dollar and Fed uncertainty weigh on precious metals

Gold and silver prices extended their declines on Tuesday as a stronger U.S. dollar and rising expectations that the Federal Reserve will maintain a restrictive policy stance reduced demand for precious metals.

As of approximately 6:06 PM GMT, spot gold traded near $4,045.29 per ounce, down 0.7% during the session, while U.S. gold futures slipped 0.8% to around $4,045.20 per ounce.

Silver also came under heavier selling pressure, with spot prices falling approximately 1.8% to around $57.30 per ounce.

The declines left both metals trading near their lowest levels in more than a week as investors shifted toward the dollar ahead of the Federal Reserve's monetary policy announcement.

Stronger dollar pressures bullion

The U.S. dollar remained close to a one-month high on Tuesday, making dollar-denominated precious metals more expensive for buyers using other currencies.

The stronger greenback continued to weigh on investor appetite for gold despite lingering geopolitical uncertainty in the Middle East.

Because gold and silver do not generate interest income, they tend to lose some of their appeal when expectations for higher U.S. interest rates strengthen.

Treasury yields also remained elevated, increasing the opportunity cost of holding non-yielding assets such as bullion.

Federal Reserve takes center stage

Investors are now focused almost entirely on the Federal Reserve's policy decision and Chairman Kevin Warsh's comments following the meeting.

Markets broadly expect the central bank to leave interest rates unchanged this week, but expectations for a rate increase later this year have strengthened.

Any indication that policymakers remain concerned about inflation could keep upward pressure on the dollar and Treasury yields, creating additional headwinds for precious metals.

Traders will also closely monitor Thursday's U.S. core Personal Consumption Expenditures inflation report, one of the Federal Reserve's preferred inflation gauges.

Silver underperforms gold

Silver posted steeper losses than gold as weakness in industrial metals and concerns about global manufacturing demand added to the pressure.

Unlike gold, silver derives a substantial portion of its demand from industrial applications, including electronics, solar panels and artificial intelligence-related manufacturing.

The broader selloff in semiconductor shares and renewed concerns about the outlook for technology investment also weighed on sentiment toward industrial precious metals.

As a result, silver's 1.8% decline significantly outpaced gold's 0.7% loss during the session.

Analysts trim price forecasts

The recent weakness has also prompted analysts to lower their outlook for precious metals.

A Reuters survey released on Tuesday showed that analysts reduced their average gold price forecasts for 2026 for the first time since 2023, reflecting expectations that higher interest rates and a stronger dollar could continue to limit gains.

Even so, central bank purchases are expected to remain an important source of long-term support for gold, while persistent geopolitical risks and concerns over government debt continue to reinforce its role as a strategic safe-haven asset.

Focus turns to the Fed

For now, precious metals remain caught between two opposing forces.

On one hand, geopolitical uncertainty and continued central bank buying continue to support long-term demand for gold.

On the other hand, a firm U.S. dollar, elevated Treasury yields and expectations for tighter monetary policy are encouraging investors to reduce exposure to bullion in the short term.

Unless the Federal Reserve delivers a more dovish message than markets currently expect, gold and silver could remain under pressure in the days ahead despite their longer-term safe-haven appeal.