Gold steady as investors brace for Fed policy meeting

Gold prices were flat on Monday, after declining about 1.3% in the previous session, as investors cautiously awaited the U.S. Federal Reserve’s policy meeting for cues on its rate-hike path.

Spot gold was little changed at $1,642.59 per ounce by 0046 GMT, while U.S. gold futures were up 0.1% at $1,645.90.

The dollar index was flat, while the benchmark 10-year Treasury yields held above the 4% threshold.

U.S. consumer spending rose more than expected in September while underlying inflation pressures continued to bubble, keeping the Fed on track to hike interest rates by another three-quarters of a percentage point at Nov. 1-2 meet.

U.S. rate hikes increase the opportunity cost of holding zero-yielding bullion, while boosting the dollar, in which it is priced.

The European Central Bank (ECB) could hike its interest rates by 75 basis points again at its next policy meeting in December, ECB governing council member Klaas Knot said on Sunday.

The festival of Diwali sparked fresh demand for physical gold in India last week, while consumers in top hub China were still subject to elevated premiums as supply remained low.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.28% to 922.59 tons on Friday.

Spot silver fell 0.3% to $19.17 per ounce, platinum eased 0.2% to $942.60 and palladium rose 0.7% to $1,914.06.