Gold prices steadied on Tuesday, weighed down by expectations for a rise in U.S. interest rates that boosted the dollar but supported at the margins by political risks in Europe.
The dollar index climbed by about 0.3 percent, making dollar-priced gold costlier for non-U.S. investors. With a rate increase by the Federal Reserve seen as a done deal, investor focus is shifting to what message the U.S. central bank will deliver when it concludes its meeting on Wednesday. In December the Fed forecast three rate rises this year.
Gold is highly sensitive to rising interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.