Gold prices eased on Tuesday after scaling an all-time high while all eyes were on the US interest rate decision that traders are betting may start with an outsized cut, reports Reuters.
Spot gold fell 0.4 per cent at $2,572.20 per ounce by 1054 GMT after scaling an all-time high of $2,589.59 on Monday. US gold futures eased 0.3 per cent at $2,599.90.
Market spotlight is on the Federal Reserve's two-day policy meeting that concludes on Wednesday. Markets are now pricing in a 65 per cent chance of a 50 basis point cut versus 34 per cent a week ago after media reports revived the prospect of more aggressive easing.
"A 50-bp Fed rate cut this week, coupled with more dovish policy signals, is likely to send spot gold above $2,600," said Han Tan, chief market analyst at Exinity Group.
"A 25-bp cut, in and of itself, could be seen as a disappointment among some bullion bulls, who may be prompted into some profit-taking that sends spot gold back closer to $2,530."
Lower interest rates reduce the opportunity cost of holding the non-yielding bullion.
"As the opportunity cost of holding gold decreases, we may see increased demand for gold-backed ETFs from asset managers, especially in the West," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.
Investors will also keep a tab on US retail sales data due later in the day. The Bank of England and the Bank of Japan also meet this week to discuss monetary policy.
Spot silver fell 0.1 per cent to $30.72 per ounce after hitting a two-month high on Monday.
"Investors cautious about paying record-high prices for gold may see better value in silver," Hansen added.
Platinum eased 0.1 per cent to $979.73. Palladium gained 1.1 per cent to $1,088.04, its highest level since April.
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