• Spot gold plunges to $4,081.01/oz, down nearly 2%, as a stronger dollar and rate-hike jitters weigh on the metal.
  • The dollar index rises 0.4%, making bullion more expensive for foreign buyers; silver, platinum, and palladium also slide.
  • Investors await Fed minutes for clues on December rate hike, with markets pricing an 86% probability of an increase.

Dollar Dominance Pressures Gold

Gold prices extended losses on Tuesday, with spot bullion last down nearly 2% at $4,081.01 an ounce, as a rallying U.S. dollar and lingering concerns over further Federal Reserve interest-rate increases sapped demand for the non-yielding asset. The move marks a sharp reversal from a brief rebound earlier this month and underscores the metal's vulnerability to shifting monetary-policy expectations.

The dollar index climbed 0.4%, adding to gold's headwinds. A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies, dampening overseas demand. "The dollar is the primary driver right now," said a trader at a European bank. "With the Fed still leaning hawkish, gold is struggling to find a floor."

All Eyes on Fed Minutes

Investors are awaiting the release of minutes from the Federal Reserve's September meeting later today for signals on whether policymakers support another rate hike this year. After softer-than-expected U.S. jobs data, markets have largely priced out a move at the October meeting, but still see an 86% probability of a December increase, according to CME (CME) FedWatch data.

Kansas City Fed President Jeff Schmid on Monday reiterated that rates need to rise further to bring inflation down, while San Francisco Fed President Mary Daly emphasized the importance of monitoring whether inflationary forces fade or persist. Their comments reinforced the uncertain path of policy, keeping gold traders on edge.

Broad Metals Weakness

The selloff was not confined to gold. Silver dropped 2.2% to $60.3638 an ounce, platinum fell 3.0% to $1,650.45, and palladium lost 2.7% to $1,140.89. The synchronized decline across precious metals highlights a broad-based retreat from the sector as investors reassess the opportunity cost of holding non-interest-bearing assets.

The pressure comes despite ongoing support from central-bank buying. China increased its gold purchases in September, extending its buying streak to 23 consecutive months, according to official data. That persistent demand could provide a longer-term underpinning, though it has done little to stem the near-term exodus.

Correction or Bear Market?

The current weakness follows a more than 6% drop in September, a correction that some analysts believe may be nearing its end. "The worst of the correction might be over," said Bart Melek, global head of commodity strategy at TD Securities (TD), earlier this month. However, the subsequent slide suggests that view remains far from certain.

Others see longer-term upside. Delegates at the London Bullion Market Association's annual conference in Italy forecast gold could reach $5,013 an ounce over the next 12 months, though such forecasts are not guaranteed. For now, the metal remains caught between the immediate pressure of a strong dollar and hawkish Fed rhetoric, and the enduring appeal of a safe haven amid geopolitical risks and record public debt.

A trader at a U.S. bank noted that "inflation concerns and government debt are still supportive, but the market is focused on the next Fed move." With the minutes due later today, volatility is likely to persist.

Update: An earlier version of this article cited a spot gold price of $4,122.73 from a report published on October 7, which reflected a smaller decline. The current price of $4,081.01 is based on the latest available data.