Gold held steady on Wednesday, heading for a third straight monthly gain, as markets awaited the outcome of the US Federal Reserve's policy meeting at which the central bank is widely expected to cut interest rates.
Spot gold was steady at $1,432.18 an ounce at 09:40 a.m. EDT (1340 GMT), while US gold futures edged 0.2% higher to $1,433.20.
Expectations for an interest rate cut by the Fed and other leading central banks, which would cut the opportunity cost of holding non-yielding gold, have put the metal on track for a 1.5% gain for July.
"The metal looks strong for now. In the recent time it has been supported by falling government bond yields. Gold's next moves will be dependent on how dovish the Fed will be today," said Fawad Razaqzada, market analyst with Forex.com.
The Fed's decision is due at 1800 GMT (2 p.m. Eastern Time in Washington), with Chair Jerome Powell scheduled to hold a press conference soon after.
Fed funds rate futures are now fully pricing in an interest rate cut of 25 basis points on Wednesday, which would be its first since the financial crisis more than a decade ago, and reduction of a further 25 basis points by September.
Backing the Fed's dovish policy tilt, US consumer spending and prices rose only moderately in June, pointing to slower economic growth and benign inflation.
"Should the FOMC surprise either via a 50 bp rate cut or a more dovish tone than expected, the key top-side target for bullion remains at $1,450," industrial and trading services group MKS PAMP said in a note.
"Aside from the FOMC meeting, there remain a number of ongoing risk events to provide price direction to bullion, namely the increasing likelihood of a no-deal Brexit and a lack of progress between the US and China in trade negotiations."
US President Donald Trump warned China against waiting out his presidency before finalising a trade deal, saying the outcome could be no agreement or a harsher one if he wins re-election in November 2020.
"So far, because of the fact (bond) yields have been falling and the technical structure has been bullish, traders have been happy to pick gold at the dips. But that could change today" after the Fed meeting, Razaqzada said.
Among other precious metals, silver slipped 0.7% to $16.43 an ounce, and platinum jumped 0.9% to $873.18 per ounce, both on track for a second straight month of gains.
Palladium rose 1% to $1,531.87 per ounce.
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