International gold prices fell to a week-and-a-half low of $1924.70 an ounce on Tuesday as rising yields on 10-year US Treasuries ahead of the Fed meeting and hopes of progress in talks between Russia and Ukraine further undermined gold's safe-haven appeal.
Spot gold fell 1.1% to $1929.46 / oz, COMEX gold fell 1.47% to $1932.0 / oz, and the dollar index fell 0.39% to 98.748.
Dominic Schnider, head of commodities and foreign exchange at UBS Wealth Management, said: "the market may be less worried that the situation in Ukraine will get worse, which removes the support of safe-haven assets such as gold."
The Russian and Ukrainian delegations held the fourth round of talks by video on Monday. The two sides did not announce any new progress, but the talks will continue on Tuesday. Ukrainian President Zelansky says he spoke with Israeli Prime Minister Bennett as part of negotiations to end the war with Russia "with a just peace."
White House officials are discussing the possibility of U.S. president Joe Biden traveling to Europe in the coming weeks to discuss Russia and Ukraine with allies, according to people familiar with the matter on Monday. The source added that as the plan has not yet been finalized, it is not clear whether the visit will take place.
"apart from the geopolitical easing, the market seems belatedly aware that this week's FOMC meeting is likely to be hawkish and that higher US bond yields will not help gold," Jeffrey Halley, a senior analyst at OANDA, said in a report.
Data released last week showed that US inflation rose at its fastest annual rate in 40 years in February, forcing Americans to spend more on rent, food and gasoline, and investors expect the Fed to raise interest rates more sharply this year.
At the end of the Fed's two-day meeting, investors will expect the Fed to further clarify how many interest rate hikes it is likely to raise this year. Since the outbreak of the war between Russia and Ukraine, investors have been balancing the Fed's more aggressive policies with geopolitical risks.
