Gold prices retreated by over 1% on Tuesday, pressured by hawkish rhetoric from Federal Reserve officials and a strengthening dollar. Market sentiment shifted after Fed Governor Christopher Waller indicated that the central bank remains committed to raising borrowing costs, potentially even considering a half-point hike if inflation remains persistent. With traders now assigning a 99% probability to a December rate increase, the appeal of non-yielding bullion has waned, causing both spot gold and futures to slide as investors brace for upcoming economic indicators.

The focus now shifts toward the release of US consumer price data, which is expected to play a critical role in shaping the Federal Reserve's monetary strategy moving forward. While gold is traditionally viewed as a hedge against inflation, elevated interest rates diminish its attractiveness to investors, who are now closely monitoring core CPI figures to gauge the strength of the economy. Should the inflation data come in higher than expected, it is likely to further bolster the dollar and Treasury yields, potentially placing additional downward pressure on gold and other precious metals like silver and platinum.