Spot gold XAU= was little changed at $1,834.00 per ounce by 12:21 p.m. EST (1721 GMT). U.S. gold futures GCv1 rose 0.1% to $1,834.20.
At its two-day meeting starting on Tuesday, the Fed is expected to announce it will tighten monetary policy at a much faster pace than thought previously to tame persistently high inflation. (Full Story)
"The Ukraine story is positive for gold and the Fed policy will eventually evolve into a little bit more conservative tapering since the Fed still believes a lot of this is going to be transitory," said Ed Moya, senior market analyst at brokerage OANDA.
While gold is considered a hedge against inflation and geopolitical risks, interest rate hikes would raise the opportunity cost of holding non-yielding bullion.
NATO said it was putting forces on standby in eastern Europe in response to Russia's military build-up at Ukraine's borders, adding to signals the West is bracing for an aggressive Russian move against the Eastern European country. Moscow has denied any plan to invade. (Full Story) (Full Story)
But despite a resultant selloff in Wall Street, gold's gains were capped as many investors also sought refuge in the dollar .DXY, thereby limiting demand for bullion amongst overseas buyers.
Eventually, gold will become a key holding for a lot of investors as they look for protection as growth concerns become more elevated and as the outlook becomes more uncertain going forward, Moya noted, adding "gold could trade between $1,800-$1,860, or even a little higher in the next couple of weeks."
Spot silver dropped 2.4% to $23.65 an ounce and platinum XPT= slipped 1.9% to $1,009.92, while palladium rose 1.8% to $2,144.15.
(Reporting by Asha Sistla in Bengaluru; Editing by Rashmi Aich)
By Asha Sistla
