Spot gold rose 0.6% to $4,020.60 per ounce by 2:09 p.m. EDT (1809 GMT) after hitting $3,975 on Friday, its lowest level since July 20.
U.S. gold futures for December delivery settled 0.8% higher at $4,038.40 per ounce.
“There’s been a bit of a pullback in crude oil, which is helping gold, while some bargain-hunting is also coming in,” said Bob Haberkorn, senior market strategist at StoneX. “I think it’s going to be light trading here and we’re going to hang around the $4,000 level into the Fed announcement to see what they have to say.”
Oil prices fell after surging last week but still held near six-month highs, amid hopes of easing hostilities between the U.S. and Iran.
The pullback in oil has eased some inflation concerns, though markets remain wary of renewed supply disruptions that could reignite price pressures.
The Fed’s rate decision is due on Wednesday, with a pause widely expected after its September hike, while expectations for a December rate hike are at 80%, according to the CME’s FedWatch Tool.
Higher rates increase the opportunity cost of holding non-yielding gold.
Fed policymakers have telegraphed they will not raise U.S. short-term borrowing costs again this week, but with inflation concerns still front and center, investors believe a rate-hike pause will not last for long.
Investors also await U.S. Personal Consumption Expenditures data due on Thursday, the Fed’s preferred inflation gauge, for fresh clues on the interest-rate outlook.
Attention is also turning to the November 3 US midterm elections, with investors assessing how the outcome could affect fiscal policy and broader market sentiment.
“We would focus less on the (election) result itself and more on what it implies for fiscal policy, tariffs, geopolitical spending and policy uncertainty. These may have implications for US Treasury yields, dollar and gold,” analysts at OCBC said in a note.
Among other metals, spot silver was up 0.2% at $54.01 per ounce, while platinum last traded down 1.2% to $1,532.55 after reaching its lowest level since November 2025.
Palladium rose 0.5% to $1,048.70. Russia’s Nornickel, the world’s largest palladium producer and a major refined nickel producer, said a planned major furnace overhaul may cut output of its key metals in 2027-2028.