Gold Holds Steady at $4,300.96/oz Ahead of Fed Rate Decision

Gold prices held steady on Tuesday at $4,300.96 per troy ounce in spot trading, according to data recorded at 01:57 GMT (05:57 UAE time). The figure matched the previous session’s close and followed Monday’s intraday low—the weakest level since August 7.

U.S. gold futures declined 0.3% to $4,341.10 per ounce. The U.S. Federal Reserve is scheduled to announce its monetary policy decision at 18:00 GMT on Wednesday (22:00 UAE time), concluding a two-day meeting. Financial markets widely expect policymakers to raise the benchmark federal funds rate by 25 basis points, placing it within a target range of 3.75% to 4.00%.

What the Fed’s Messaging Means for Gold

Tony Sycamore, market analyst at IG, stated: “How Federal Reserve Chair Jerome Powell frames this hike will matter more for gold than the hike itself. If he presents it as the start of a new tightening cycle—where decisions are made meeting-by-meeting—it would be a blow to gold and risk assets broadly.”

He added: “If instead he signals a preference for a more moderate pace, that would provide modest support to risk sentiment—and to gold.”

Why Higher Rates Weigh on Gold

Although gold is traditionally viewed as a hedge against inflation and geopolitical risk, it often loses appeal when interest rates rise. Higher rates increase the opportunity cost of holding a non-yielding asset like gold.

U.S. consumer price index data released last Friday showed accelerating annual inflation for August. A key measure of core inflation posted its largest four-month gain since April.

Meanwhile, the yield on U.S. 10-year Treasury notes reached the psychologically significant 5% threshold on Monday—the first time since October 2023.

Other Precious Metals

Among other precious metals, spot silver rose 0.1% to $63.28 per ounce. Spot platinum fell 0.1% to $1,757.46, and spot palladium dropped 0.7% to $1,283.61.