NEW YORK (TheStreet) -- Fed buoys the U.S. dollar, gold prices slip.

The

U.S. dollar index

was rallying Tuesday ahead of the

Federal Reserve's

two day

FOMC

meeting. Recent better-than-expected economic news is sparking some suspicion that the Fed might raise interest rates sooner than anticipated. The Fed is expected to leave rates unchanged on Wednesday but analysts are looking for signs of a potential rate hike. Sustained low interest rates means inflation is more likely and investors buy gold as a hedge. However, speculation of a hike is strengthening the U.S. dollar and putting pressure on gold prices.

"As the Fed talks so the dollar goes", says Jon Nadler, senior analyst at Kitco.com. "Obviously the bets that were previously crowded towards to the third and fourth quarter of next year as far as interest rate hikes were concerned have now started to pop up even as soon as March

and April."

Gold prices were falling $2.20 to $1,121.60 an ounce at the Comex division of the New York Mercantile Exchange. Gold delivery for February has traded as high as $1,130 and as low as $1,112. The U.S. dollar index was popping .62% to $76.83.

Silver prices were slipping 10 cents to $17.24 while copper was down 2 cents to $3.12.

Mining stocks, a more leveraged way to

invest in gold

, were falling. Large cap miners

Barrick Gold

(ABX)

and

Newmont Mining

(NEM) - Get Report

TST Recommends

were trading at $39.90 and $51.57 respectively. Shares of

Freeport McMoran Copper & Gold

(FCX) - Get Report

were flat at $78.84 while

Yamana Gold

(AUY) - Get Report

was at $12.23.

SPDR Gold Shares

(GLD) - Get Report

was falling .83% to $110.24. The popular physically backed ETF lost .31 tons on Monday.

Market Vectors Gold Miners

(GDX) - Get Report

was down 1.00% to $48.47 while

Market Vectors Juniors

(GDXJ) - Get Report

was trading at $26.30.

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Written by Alix Steel in New York

.