Gold muted ahead of Fed meeting for rate hikes cues

Shafaq News / Gold prices were little changed on Monday, as investors awaited the U.S. Federal Reserve's meeting for clues on its interest rate hikes, while concerns over inflation and Russia-Ukraine discord kept bullion's safe-haven allure intact.

Spot gold was flat at $1,836.21 per ounce by 0403 GMT. U.S. gold futures were up 0.3% to $1,836.80.

Investors sought cover from worries about a possible extension of U.S. sanctions or new EU (European Union) measures if Russia attacks Ukraine, "but (gold and silver) face headwinds from FOMC expectations," Phillip Futures analyst Avtar Sandu said in a note.

The Fed will tighten monetary policy at a much faster pace than thought a month ago to tame persistently high inflation, now viewed by economists polled by Reuters as the biggest threat to the U.S. economy over the coming year.

The U.S. central bank's Federal Open Market Committee (FOMC) is scheduled to meet on Jan. 25-26.

Gold is generally seen as an inflationary hedge, but it is highly sensitive to rising U.S. interest rates, which increases the opportunity cost of holding non-interest bearing bullion.

Benchmark U.S. 10-year Treasury yields fell on Friday, reducing the opportunity cost of holding non-interest bearing bullion.

Source: Reuters