Gold prices remained locked just below $1,300 an ounce on Tuesday as investors waited for clues on the pace of US interest rate rises following the impending conclusion of a Federal Reserve policymaking meeting. Investors expect the Fed to raise rates on Wednesday but will be looking for hints at future policy. A more aggressive stance on monetary tightening would hurt gold.
"We are waiting for the FOMC," said Saxo Bank analyst Ole Hansen, referring to the Fed's policy committee. Gold prices have tended to fall ahead of previous rate rises but recover afterwards, he said. "We're still erring towards the potential for a move higher here." Spot gold fell 0.4 percent at $1,294.96 per ounce by 1:35 p.m. EDT (1735 GMT), earlier hitting $1,292.60, a one-week low. US gold futures for August delivery settled down $3.80, or 0.3 percent, at $1,299.40 per ounce.
Adding to the wait-and-see mood were expectations that the European Central Bank would signal a winding down of its vast bond-buying program at a meeting on Thursday. This would be likely to help gold by boosting the euro and weakening the dollar. In other precious metals, silver lost 0.2 percent to$16.86 an ounce after matching Monday's seven-week high of $16.95.
"If the price were to exceed the $17 mark, this could lure in further buyers and continue the price rise," Commerzbank said in a note. Platinum declined 1.2 percent to $893.50 per ounce and palladium dipped 0.4 percent to $1,018.
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