Gold fell on Tuesday as the US dollar and Treasury yields rose on expectations of faster US rate hikes, but held above chart support at $1,830 on concerns over rising inflation and escalating tensions over Ukraine.
Spot gold was down 0.3% at $1,837.61 per ounce by 1230 GMT, while US gold futures were 0.2% lower at $1,837.80.
"Despite the Fed likely set to announce the start of a US rate hike cycle this week, gold keeps holding up well. Support for the yellow metal comes from high inflation and elevated market volatility," UBS analyst Giovanni Staunovo said.
"Unless the Fed surprises with an even more hawkish statement, gold (could) stay supported," said Staunovo, adding that historically, gold outperforms equities when market volatility increases.
Gold lingers near 2-month highs; palladium climbs
Risk appetite was dampened by concerns that Russia may invade Ukraine. NATO on Monday said it was putting forces on standby and reinforcing Eastern Europe with more ships and fighter jets.
US benchmark 10-year yields recovered from last session's lows, while the dollar rose to more than two-week highs ahead of the Fed's two-day policy meeting starting later in the day.
The Fed is expected to signal on Wednesday that it plans to raise rates in March and to offer insight into how aggressive the central bank intends to be. Rising interest rates increase the opportunity cost of holding non interest-bearing bullion.
Gradual rate hikes, accompanied by declining inflation, steady economic growth and stable markets may be the ideal scenario for US monetary policy, but this is a difficult path to stay on, BofA Global Research said in a note.
"The risk of a policy mistake is high and rising equity volatility tends to support perceived safe havens, gold included."
Spot silver fell 1.2% to $23.66 an ounce. Platinum dipped 1.8% to $1,009.
Palladium rose 0.7% to $2,163.23, having jumped to the highest since Nov. 18.
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