Gold Eases for Third Straight Session as Markets Await Fed Verdict

Gold prices declined for a third consecutive session on Wednesday, with investors holding back ahead of the U.S. Federal Reserve's policy announcement later in the day.

Spot gold was down 0.3% at $4,279.89 per ounce as of 0037 GMT, while U.S. gold futures for December delivery also shed 0.3% to trade at $4,320.30.

The Fed's decision is scheduled for 1230 GMT and will be followed by a press conference by Chair Kevin Warsh, which market participants will scrutinise for signals on the direction of interest rates.

Expectations of tighter policy have hardened. Traders are now pricing in a 92.4% probability of at least a 25-basis-point increase later in the day, according to CME FedWatch.

Morgan Stanley has joined a growing list of major Wall Street banks in shifting to a more hawkish stance, projecting Fed rate hikes as well as another European Central Bank increase later this year amid persistent inflationary pressures.

Gold is traditionally viewed as a hedge against inflation, but rising interest rates raise the opportunity cost of holding the non-yielding metal.

The dollar held firm against most major currencies, making greenback-priced bullion more expensive for holders of other currencies, while oil prices hovered above $100 a barrel, adding to broader price pressures.

In the Middle East, Saudi Arabia issued security alerts across a range of territory, including the holy city of Mecca and the second-largest city Jeddah, after a week of attacks by Iran-aligned fighters that have drawn the kingdom deeper into the regional conflict.

Among other precious metals, spot silver was steady at $63.63 per ounce, platinum slipped 0.1% to $1,771.85 and palladium gained nearly 1% to $1,300.75.

Later in the day, markets will also watch UK core and headline consumer price inflation figures for August, along with U.S. import prices and retail sales data.