Gold prices steady with investor focus on Fed meet

GOLD prices traded in a tight range on Tuesday (Sep 20), as investors maintained a cautious stance ahead of this week's policy meeting by the Federal Reserve where the US central bank is likely to hike interest rates to tame high inflation.

Spot gold held its ground at US$1,676.80 per ounce, as of 12.37 am GMT. US gold futures rose 0.5 per cent at US$1,686.70.

The US Fed, at the conclusion of its 2-day policy meeting on Wednesday, is expected to raise interest rates by 75 basis points, with markets even seeing a 19 per cent chance for a 100 bps increase.

High interest-rate environment increases the opportunity cost of holding non-yielding bullion.

Gold prices weakened on Monday, hovered towards a 29-month low hit on Friday, as the US dollar and Treasury yields firmed on expectations of a hefty Fed rate hike.

Even though the dollar index dipped 0.3 per cent, it wasn't far from a 20-year high. Stronger greenback makes bullion more expensive for other currency holders.

The benchmark 10-year Treasury yield held close to its highest level in over a decade scaled on Monday.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.30 per cent to 957.95 tonnes on Monday from 960.85 tonnes on Friday.

Spot silver lost 0.7 per cent to US$19.48 per ounce.

Platinum dipped 0.1 per cent to US$918.29 and palladium was down 1.5 per cent at US$2,191.75. REUTERS