Gold holds steady as focus turns to Fed meeting

Gold prices were steady on Tuesday as investors adopted a wait-and-see approach ahead of the US Federal Reserve’s two-day monetary policy meeting, when the central bank is widely expected to cut interest rates.

Spot gold firmed slightly, adding 0.1 per cent to $1,499.24 an ounce by 0937 GMT.

Gold prices rose more than 1 per cent early Monday before settling 0.6 per cent up for the day after a weekend attack on oil facilities in Saudi Arabia inflamed worries over stability in the Middle East.

US gold futures were down 0.3 per cent at $1,507.

“The market is relatively stable, there is so much (interest) pointed towards the Fed meeting tomorrow, it seems like traders have taken a little bit of a pause,” said OANDA senior market analyst Craig Erlam.

“Gold got a bit of a bounce yesterday from the geopolitical (fallout) from the attacks, but it didn’t even break the $1,520 level on the news, which suggests that gold is a little vulnerable, with $1,480 being the key support level.”

The Federal Open Market Committee (FOMC) is widely expected to cut interest rates at its two-day meeting starting later in the day. It would be the central bank’s second such cut after lowering rates in July for the first time since the financial crisis.

The expected decision from the Fed could put pressure on the Bank of Japan to ease policy at a meeting due on Thursday.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, ..