Gold down on stronger U.S. dollar ahead of Fed meeting

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Tuesday as the U.S. dollar showed strength ahead of the Wednesday meeting of the U.S. Federal Reserve.

The most active gold contract for February delivery fell 1.8 U. S. dollars, or 0.17 percent, to settle at 1,061.60 dollars per ounce. Investors awaited the statement after the conclusion of Federal Reserve's two-day meeting on Wednesday.

Many believed an interest rake hike will occur, putting gold under pressure. The U.S. dollar index, a measure of the dollar against a basket of major currencies, rose by 0.70 to 98.27 as of 18:15 GMT. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

The precious metal was put under further pressure as a report released on Tuesday by the U.S. Department of Labor showed the consumer price inflation for November was a little bit higher than expected. Meanwhile, the core reading also increased by 0.1 to 2.0 percent which hits the Fed's target inflation, further cementing the expectation for a rate hike at the December FOMC meeting on Wednesday.

Analysts believed that the long-term trend for gold remains strongly bearish as investors are waiting for a series of expected U.S. Federal Reserve's rate hikes, the first of which will likely come on Wednesday. Expectations were originally for a delay in the rate hike until 2016 but the FOMC meeting in late October sent out a strong signal for a rate hike before the end of 2015.

An increase in the Fed's interest rate drives investors away from gold and toward assets with a return, as the precious metal bears no interest. There has not been an increase in the Fed's interest rate since June 2006, before the beginning of the American financial crisis.

Silver for March delivery rose 7.5 cents, or 0.55 percent, to close at 13.77 dollars per ounce. Platinum for January delivery rose 5.6 dollars, or 0.66 percent, to close at 855.80 dollars per ounce.