Gold Steadies Near One-Month Low as Markets Await Fed Decision

Gold prices were little changed on Tuesday, a day after spot bullion touched its weakest level since August 7, as investors positioned themselves ahead of the U.S. Federal Reserve's policy announcement.

Spot gold traded at about $4,300.96 an ounce in early Asian hours, while U.S. gold futures slipped 0.3% to $4,341.10.

The Fed is scheduled to announce its decision at 1800 GMT on Wednesday, after concluding a two-day meeting. Financial markets are widely expecting policymakers to raise the benchmark rate by a quarter of a percentage point to a 3.75%-4.00% range.

Analysts said the tone set by Fed Chair Kevin Warsh would matter more for gold than the increase itself. IG market analyst Tony Sycamore said that if Warsh presents the move as the beginning of a meeting-by-meeting tightening cycle, it would weigh on gold and risk assets broadly. A signal favouring a more measured pace, he added, would offer some support to risk sentiment and to gold.

Gold is often sought as a hedge against inflation and geopolitical uncertainty, but rising interest rates tend to erode its appeal by increasing the opportunity cost of holding a non-yielding asset.

Friday's data showed U.S. consumer prices picked up in August, with a key measure of underlying inflation recording its largest gain in four months.

On the geopolitical front, Yemen's Iran-aligned Houthis launched a fresh round of attacks on Saudi Arabia and were entrenching positions along Yemen's western Red Sea coast. Oil prices climbed on concerns about possible supply disruptions.

In bond markets, the U.S. 10-year Treasury yield reached the 5% mark on Monday for the first time since October 2023 — a level analysts say could affect the broader U.S. economy and pressure the stock market's bull run by reducing the relative appeal of equities.

Among other precious metals, spot silver edged 0.1% higher to $63.28, platinum dipped 0.1% to $1,757.46 and palladium fell 0.7% to $1,283.61.