BENGALURU: Gold prices held near a four-week low on Wednesday ahead of a US Federal Reserve policy decision that could shed more light on the central bank’s rate trajectory following hot US economic data in the recent weeks.

Spot gold was flat at $2,285.69 per ounce as of 0829 GMT, after hitting its lowest level since April 5 earlier in the session. Prices fell as much as 2% on Tuesday due to an uptick in the dollar and US Treasury yields. Bullion prices have fallen more than $140 after scaling a record high of $2,431.29 on April 12. US gold futures were down 0.3% at $2,296.30 per ounce.

“Gold was unwinding overbought conditions and is now oversold so it’s likely that there is some technical bargain hunting appearing,” said StoneX analyst Rhona O’Connell who expected a near-term consolidation in prices.

Focus is now on the US central bank’s policy decision due at 1800 GMT followed by remarks from Chair Jerome Powell. The Fed is expected to hold its benchmark interest rate steady at 5.25% to 5.5%. Financial markets have already scaled back bets on the amount on US policy easing likely this year and are now only fully pricing in one US rate cut before December.

“Unlikely that Powell can say much that would pressure prices lower given that the markets are now pricing in somewhere between one or two rate cuts this year, and with the strong US labour markets it looks more like one than two,” O’Connell added.

Data on Tuesday showed that US labour costs increased more than expected in the first quarter, chiming with a recent series of surprisingly strong inflation data. Gold is known as an inflation hedge but elevated interest rates reduce the appeal of holding the non-yielding asset.

China’s financial markets are closed from May 1 to 5 for the Labour Day holiday. Among other metals, spot silver rose 0.6% to $26.43 per ounce and platinum climbed 0.6% to $939.00. Palladium lost 0.7% to $940.75, having hit its lowest in nearly two months in the previous session.