Gold steadies near US$4,400 as traders weigh Fed rate hike path

Gold prices settled near $4,400 an ounce on Wednesday, as market participants considered the Fed's potential interest rate hike. This development followed Brent crude prices reaching $100 a barrel for the first time since July, raising concerns about inflation. Traders were awaiting the release of US inflation data later in the week to gauge the likelihood of a rate increase by the Federal Reserve.

Bullion had risen by 1% in the previous session, breaking a three-day losing streak. Gold has been trading in a narrow range in recent weeks, with investors betting on its long-term value as a portfolio hedge despite short-term headwinds from rising bond yields and tensions in the Middle East. Yields on 10-year Treasuries increased following a government plan to purchase up to $6 billion of longer-rated debt, which failed to impact the market.

The reaction to Brent crude prices hitting $100 a barrel on Wednesday came despite the ongoing Middle East conflict, which has raised the risk of further disruptions to energy supplies. Since climbing from a low near $4,000 an ounce in July, gold has generally fluctuated around the $4,400 mark as investors reassess Fed policy expectations.

Investors will be monitoring key economic indicators, such as the US producer price index and consumer price index, as well as the Federal Reserve's meeting scheduled for September 14-15. Swaps traders currently estimate a 65% probability of a rate hike. Spot gold remained steady at $4,400.32 an ounce in Singapore at 7:22 am. Silver saw minimal change at $67.29 an ounce, after gaining 2.4% in the previous session.

Platinum and palladium also saw slight increases. The Bloomberg Dollar Spot Index, a measure of the US dollar, decreased by 0.1%.