Gold holds ground as investors await Fed policy cues

Spot silver XAG= steadied at $63.25, platinum XPT= gained 0.7% at $1,770.81 and palladium XPD= fell 0.4% to $1,288.25.

Gold held steady on Tuesday after touching a more than one-month low in the previous session, as investors geared up for the U.S. Federal Reserve's policy decision for clues on the future path of monetary policy.

Spot gold XAU= was little changed at $4,302.13 per ounce, as of 0510 GMT, after hitting its lowest point since August 7 on Monday.

U.S. gold futures GCcv1 were down 0.2% at $4,341.70.

The U.S. central bank will announce its policy decision at 1800 GMT on Wednesday following the end of a two-day meeting. Financial markets are betting heavily that Fed policymakers will lift their benchmark rate a quarter of a percentage point to a 3.75%-4.00% range. FEDWATCH

"How Fed Chair Kevin Warsh frames that hike will matter more than the hike itself for gold... If he casts it as the start of a meeting-by-meeting tightening cycle, that would be a hit to gold and to risk assets overall," IG market analyst Tony Sycamore said.

"If instead he signals a preference for a more measured pace, that would prove somewhat supportive for risk sentiment and for gold."

Though seen as a hedge against inflation and geopolitical risks, gold often loses appeal when rates increase as they raise the opportunity cost of holding non-yielding bullion.

Data on Friday showed U.S. consumer prices accelerated in August, while a key measure of underlying inflation posted its largest increase in four months.