Gold Holds Above $4,000 as Traders Look to Fed Rate Decision

Gold prices maintained above the US$4,000 mark as traders anticipated the Federal Reserve's interest rate decision later in the week. The precious metal recovered from its lowest point since mid-July, buoyed by dip-buyers entering the market before the Fed meeting. Bullion posted a 1.1% gain from the previous session. Oil prices remained flat after declining for two consecutive days, as traders focused on the outcome of a closely watched Israeli election.

Equities were expected to rise due to renewed interest in the artificial intelligence sector. A recent sell-off in AI-related stocks had pushed gold to its lowest level since mid-July, as investors sold the metal to offset losses in other areas. Despite falling below the US$4,000 threshold in recent days, physical buyers and bargain hunters helped prevent a more significant decline.

Chinese households' increased demand for bullion, coupled with softer onshore equities, provided support for gold. The Federal Reserve is anticipated to keep interest rates steady this week, which could be favorable for gold, although traders also consider a potential rate hike before the end of the year. Chair Kevin Warsh faced the challenge of reassuring investors about the central bank's commitment to controlling inflation if rates remain unchanged.

Spot gold was stable at US$4,060.73 an ounce at 7:30 am Singapore time. Silver showed a slight increase at US$54.44 an ounce, while platinum and palladium also rose. The Bloomberg Dollar Spot Index, which measures the US currency, saw a slight gain of 0.3% after adding on Tuesday.