Gold prices held steady on Tuesday after touching their lowest level in more than a month in the previous session, as investors awaited the US Federal Reserve’s interest rate decision for clues about the future path of monetary policy.
Spot gold was unchanged at $4,300.96 an ounce by 1:57 a.m. GMT, after falling on Monday to its lowest level since August 7.
US gold futures fell 0.3% to $4,341.10 an ounce.
The Federal Reserve is scheduled to announce its monetary policy decision at 6:00 p.m. GMT on Wednesday, following a two-day meeting. Financial markets are heavily betting that Fed policymakers will raise the benchmark interest rate by a quarter percentage point to a range of 3.75% to 4%.
“The way Federal Reserve Chair Kevin Warsh frames this hike will be more important for gold than the hike itself,” said Tony Sycamore, a market analyst at IG. “If he portrays it as the beginning of a tightening cycle in which decisions are made meeting by meeting, that would be a blow to gold and risk assets more broadly.”
“If, instead, he signals a preference for a more moderate pace, that would provide some support to risk sentiment and gold,” he added.
Although gold is widely viewed as a hedge against inflation and geopolitical risks, it often loses some of its appeal when interest rates rise, as higher rates increase the opportunity cost of holding a non-yielding asset.
Data released on Friday showed that US consumer price growth accelerated in August, while a key measure of underlying inflation recorded its largest increase in four months.
On the geopolitical front, Iran-aligned Houthi forces in Yemen launched a new wave of attacks on Saudi Arabia and strengthened their presence along Yemen’s western Red Sea coast. Oil prices rose amid concerns over supply disruptions.
Meanwhile, the yield on 10-year US Treasury notes reached the psychologically important 5% level on Monday for the first time since October 2023.
Among other precious metals, spot silver rose 0.1% to $63.28 an ounce, while platinum fell 0.1% to $1,757.46 and palladium dropped 0.7% to $1,283.61.
Source: Reuters
