Investing.com - Gold prices held near their highest level in around a month in European trade on Tuesday, as market players looked ahead to a Federal Reserve policy meeting for any new insight on the timing of the next U.S. rate hike and clues on how the central bank plans to pare back its balance sheet.
Comex gold futures were at $1,256.73 a troy ounce by 3:15AM ET (0715GMT), up $2.60, or about 0.2%. It touched its highest since June 26 at $1,259.00 in the prior session.
Gold prices finished a few cents lower on Monday, ending a six-session win streak.
The Fed is not expected to take action on interest rates at the conclusion of its two-day policy meeting on Wednesday, keeping it in a range between 1.0%-1.25%.
The central bank will release its post-meeting statement as investors look for any change in language which could point more clearly to a rate hike in the months ahead.
Market players will also pay close attention to details of when and how the Fed will start reducing its $4.5 trillion balance sheet.
According to Investing.com’s Fed Rate Monitor Tool, conviction for another rate hike before the end of the year has faded, with just 35% of market players expecting another move by December, as the subdued inflation outlook raised doubts over whether policymakers will be able to stick to their planned tightening path.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
Focus will also be on headlines coming out of Washington, where the Senate is expected to continue working to repeal Obamacare. The investigation into U.S. President Donald Trump campaign's ties to Russia will continue to get attention.
Gold has been well-supported in recent sessions as ongoing political turmoil in the White House and weakness in the U.S. dollar spurred haven demand for the precious metal.
Elsewhere on the Comex, silver futures inched up 4.0 cents, or roughly 0.2%, to $16.48 a troy ounce, after hitting a three-week high of $16.57 a day earlier.
Among other precious metals, platinum was up 0.6% at $937.65, while palladium added 0.6% to $854.15 an ounce.