Gold prices traded steady on Tuesday as most traders stayed on the sidelines ahead of a widely expected rate cut by the U.S. Federal Reserve later this week.
Spot gold was little changed at $1,497.98 per ounce, as of 0359 GMT, after rising as much as 1 percent in the previous session on intensifying tensions in the Middle East.
U.S. gold futures were down 0.4 percent at $1,505.4 per ounce.
“The market is searching for a new catalyst … The 25 basis point rate cut is relatively priced in already, but what traders are really looking for is forward guidance,” Phillip Futures analyst Benjamin Lu said.
A quarter-point rate cut is widely expected when the Fed issues its next policy statement on Wednesday, which would be the central bank’s second such cut after lowering rates in July for the first time since 2008.
A press conference by Chair Jerome Powell is scheduled to follow the release of the central bank’s statement.
The Fed’s language and new economic projections will be watched out for amid a bruising U.S.-China trade war, stimulus by the European Central Bank, and a stream of weak manufacturing data that may hint at larger problems for the United States.
“If the Fed goes against market expectations, there is a strong possibility that we may see a short-term reversal (in gold prices) and a quick sharp test towards $1,455,” Lu said.
Also, the weekend bombings of Saudi Arabia’s main oil refinery have sparked U.S. President Donald Trump to pressure the Fed anew to lower rates.
“It appears conviction remains positive so long as gold hangs around $1,500,” Stephen Innes, Asia Pacific market strategist at AxiTrader, said in a note.
“Flows have been very mixed caught between pre-FOMC position squaring while hedging for a possible U.S. military response on Iran.”
Meanwhile, currencies of oil-exporting countries held firm, while the U.S. dollar found broad support as the attacks on Saudi oil facilities and the threat of military action in the region buoyed crude prices, while stocks were under pressure.
Trump said on Monday it looked like Iran was behind the attacks but stressed he did not want to go to war.
On the Sino-U.S. trade war front, deputy-level talks between the United States and China are scheduled to start in Washington on Thursday, paving the way for high-level talks next month aimed at resolving a bitter trade row that has dragged on for more than a year.
Elsewhere, silver was down 0.1 percent at $17.83 an ounce.
Platinum also inched 0.1 percent lower to $936.10, while palladium rose 0.2 percent to $1,607.77, having touched a record high of $1,626.81 in the previous session.