LONDON: Gold prices were hemmed into a range on Monday, ahead of a key Federal Reserve meeting this week where the focus is on the central bank's plan for tapering its pandemic stimulus measures.
Spot gold gained 0.07% at $1,784.08 per ounce by 1142 GMT, after touching a more one-week low on Friday. US gold futures for December delivery edged up 0.03% to $1,784.30 per ounce.
"Gold has been range-bound for nearly five months. We need some fresh air coming into markets and this week's Fed meeting could be such an event," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
"We already are seeing the markets pricing in a rate hike around May or June next year, which is almost a year earlier than what the market was expecting a few months ago, and that has been the latest challenge for gold."
Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of holding non-interest bearing gold.
Data on Friday showed the jury was still out on the Fed's view that inflation is transitory and should moderate with time, with the personal consumption expenditures price index advancing last month.
The Fed, which concludes a two-day meeting on Wednesday, is expected to say it will start to taper bond purchases, though the focus is on clues about rates lift-off.
"While stickier inflation could translate in stronger bids for gold, the precious metal has to muscle past other asset classes in vying for investors' attention as a hedge against faster inflation," said Han Tan, chief market analyst at Exinity.
The dollar index steadied close to a more than two-week high hit on Friday, making bullion less appealing to holders of other currencies.
Elsewhere, Silver fell 0.1% to $23.82 per ounce.
Platinum rose 1.1% to $1,029.52 per ounce. Palladium slipped 0.4% to $1,995.13 per ounce.
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