Gold stalls for rate hike cues from Fed

Spot gold was little changed at $1,981.79 per ounce by 0853 GMT, while U.S. gold futures were down 0.1% to $1,989.80.

The Federal Open Market Committee on Tuesday starts a two-day meeting, during which it is widely expected to raise rates by 25 basis points. However, if the Fed's statement adopts a cautious stance, this could weaken the dollar – ultimately boosting gold prices, said Lukman Otunuga, senior research analyst at FXTM.

Although gold is considered a hedge against economic uncertainties, rising rates hurt demand for the zero-yielding asset."It may be wise to watch out for the European Central Bank meeting which is expected to conclude with a 25bp rate hike. Any unexpected moves by the central bank may influence the euro, which in turn could impact the dollar – trickling down to gold," Otunuga added.

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