Gold fell more than 1% on Tuesday, with spot prices touching $4,142.61 per ounce, as the US dollar held firm near a one-year high and markets priced in a near-certain Federal Reserve interest-rate increase in December. The decline extended Monday’s losses, when gold futures settled 1% lower, and came despite a brief steadier patch in early Asian trade. The stronger dollar, buoyed by hawkish central-bank expectations, made bullion more costly for buyers holding other currencies.

The CME FedWatch tool now shows an 88% probability of a December rate rise, up sharply from 61% before the Fed’s meeting last week. Chicago Fed President Austan Goolsbee said he was focused on whether elevated inflation would persist or recede as the effect of high tariffs fades and if the Middle East conflict is resolved. New Fed Chair Kevin Warsh is scheduled to deliver his first monetary-policy testimony to Congress on 14 July, an event that markets in New York and London view as a potential signal on the rate path. Higher borrowing costs reduce the appeal of non-yielding assets, and the dollar’s strength has become the primary driver of the metal’s direction, according to analysts in the Gulf.

Progress in US-Iran peace talks further undercut gold’s safe-haven bid. Washington waived sanctions on Iran for 60 days starting Monday after the first round of negotiations, and Vice President JD Vance described the talks as laying a good foundation for a final deal, though Tehran denied discussing its nuclear programme. A communication line between the two sides aims to secure safe passage for vessels through the Strait of Hormuz, and officials reported a sustained lull in fighting in Lebanon. Crude oil prices, which had collapsed 38% from their late-April peak, fell again on Monday before stabilising on Tuesday. The easing of energy-supply fears and the prospect of reduced inflationary pressures have diminished the urgency to hold gold as a hedge, analysts in São Paulo and Copenhagen noted.

The sell-off extended across the complex: spot silver dropped 3.3% to $63.05 an ounce, platinum lost 1.9% and palladium fell 1.8%. Gold remains roughly a fifth below its pre-war level, and silver has shed more than 30%, reflecting how the twin forces of monetary tightening and de-escalation have reshaped the market. Investors now turn to the US Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge, due later this week, for further clues on the rate outlook. The 60-day sanctions window and the Warsh testimony in mid-July will be the next key markers for bullion’s trajectory.