NEW YORK: Gold prices gained on Wednesday, as investors awaited for the Federal Reserve to start its US monetary easing cycle for the first time in over four years.

Spot gold rose 0.3% to $2,577.75 per ounce as of 9:30 a.m. ET (1330 GMT), hovering below a record high of $2,589.59 hit on Monday. US gold futures were up 0.5% to $2,604.30. The day’s focal point will be the Fed’s verdict on interest rates at 1800 GMT, followed by comments from Chair Jerome Powell at 1830 GMT.

“I think everything is just in anticipation of the Fed cutting rates.. gold prices are also being supported by what’s going on in the Middle East,” said Daniel Pavilonis, senior market strategist at RJO Futures. The Fed is likely to reduce interest rates for the first time since 2020, but it’s uncertain if policymakers will opt for a half-percentage-point cut or a smaller move.

Traders are pricing in a 63% chance of a 50-basis-point reduction, according to the CME FedWatch tool. “Should the Fed, as we expect, cut interest rates ‘only’ by 25 basis points, this is likely to cause disappointment in the market and weigh on the gold price,” Commerzbank analysts said in a note. “For gold to rise and mark new all-time highs following the Fed meeting, interest rates would have to be cut by 50 basis points today and, in addition, further substantial interest rate cuts would have to be signaled very clearly.”

Spot silver inched 0.3% lower to $30.63 per ounce after hitting a two-month high on Monday. “After a recent sell-off, silver prices are recovering with rising gold prices.