Gold Stalls Ahead of Federal Reserve Rate Hike Decision

Gold prices held steady on Tuesday after hitting a more than one-month low in the previous session. The metal was little changed at $4,302.13 per ounce, while US gold futures were down 0.2% at $4,341.70.

The stability of gold prices comes ahead of the Federal Reserve's policy decision on Wednesday, which is expected to lift interest rates a quarter percentage point to a range of 3.75-4%. Financial markets are heavily betting on this outcome.

According to IG market analyst Tony Sycamore, 'How Fed chair Kevin Warsh frames that hike will matter more than the hike itself for gold.' If Warsh signals a meeting-by-meeting tightening cycle, it could be a hit to gold and risk assets. On the other hand, if he prefers a measured pace, it would prove somewhat supportive for gold.

Gold often loses appeal when interest rates increase as they raise the opportunity cost of holding non-yielding bullion. The recent data on US consumer prices accelerated in August, with underlying inflation posting its largest increase in four months.