Gold prices muted ahead of Fed meeting for rate hikes cues

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. [US/]

Russia will face severe economic sanctions if it installs a puppet regime in Ukraine, a senior British minister said on Sunday after the UK accused the Kremlin of seeking to install a pro-Russian leader there.

Spot gold may retest a resistance at $1,850 per ounce, a break above which could lead to a gain to $1,860-$1,872 range, according to Reuters' technical analyst Wang Tao. [TECH/C]

Spot silver shed 0.3% to $24.15 an ounce. Palladium rose 0.8% to $2,124.21 and platinum was up 0.4% to $1,032.80.

 

(Reporting by Asha Sistla in Bengaluru; Editing by Rashmi Aich)