Investing.com - Every Federal Reserve meeting is important, but the current session will probably be the most telling since the March meeting that decided this year's first rate hike. Consequently, gold traders hedged themselves on Tuesday with a slightly higher price move, awaiting the outcome.
The Fed announcement Wednesday could signal a break in the central bank's tightening cycle, based on dovish speeches its officials have made for weeks now. And gold could be set for a sustained rally if that's true, analysts say.
Futures of the yellow metal have crossed the key $1,250 level ahead of the meeting and look poised to go on to the $1,300 zone -- an area it last visited six months ago -- if the Fed suggests that economic conditions aren't too favorable for continued rate hikes. Chances are still strong that the central bank will opt for a hike in December, with bets at 70.6% for a quarter point increase.
"Gold's rally is on hold for now as all eyes are on the Fed for tomorrow," said George Gero, precious metals analyst at RBC Wealth Management in New York.
Benchmark COMEXgold futures for February settled up $1.80 at $1,253.60 per troy ounce.
The Dollar Index, which hit 19-month highs of 97.715 last week, was barely changed too, trading just 3 points lower at 96.52 by 4:18 PM ET (21:18 GMT).
Many traders think the dollar will be battered in coming months if the Fed decides to hold on rates.