Gold was trading near its lowest in a month on Monday, as investors waited for a Federal Reserve policy meeting later this week for clarity on when the US central bank will hike interest rates. Spot gold was steady at $1,108.06 an ounce by 0633 GMT, after losing 0.3 percent on Friday. The metal had fallen to $1,098.35 in the previous session, its lowest since August 11.
US gold edged up 0.4 percent to $1,107.40, but also near its lowest in a month. The Fed will kick off a much awaited two-day policy meet on Wednesday. Many expect traders to remain on the sidelines until the Fed statement on Thursday, though prices could drop because of persistent uncertainty. "Should the Fed choose not to raise rates, and issue dovish guidance, we would expect gold to rally," said HSBC analyst James Steel.
"How strong that rally may be could depend on how equity and currency markets also react to the Fed's decisions," he said. Gold prices have been hurt this year by uncertainty over the timing of the Fed's first rate hike in nearly a decade. Bullion has benefited in recent years from ultra-low rates, which cut the opportunity cost of holding non-yielding gold while weighing on the dollar, in which it is priced. Concerns over slowing economic growth in China, mixed economic data and volatility in financial markets have increased doubts about the timing of any US rate increase, which had been expected as early as this month.
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