- Fed interest rate decision due at 1800 GMT
- Traders price in 36% chance of a rate hike - CME FedWatch
- Tehran rules out Oman's proposal
July 29 (Reuters) - Gold prices edged up on Wednesday, supported by some technical buying, as investors hunkered down ahead of the Federal Reserve's interest rate decision later in the day.
Spot gold rose 0.1% to $4,032.59 per ounce by 1121 GMT, while U.S. gold futures for August delivery fell 0.2% to $4,031.90.
"Gold is holding up today on dip-buying around the psychological $4,000 level, prospects of a US-Iran diplomatic off-ramp and market expectations for a Fed hold," said Nikos Tzabouras, senior market analyst at Jefferies-owned Tradu.com.
The Fed's policy decision is due at 1800 GMT, with Fed Chair Kevin Warsh's comments scheduled for 1830 GMT.
About 36% of market participants are pricing in a 25-basis-point hike, according to the CME FedWatch Tool. FEDWATCH
"Today's announcement and press conference could spark significant volatility. Any hawkish signals would open the door to new 2026 lows, currently sitting at $3,941, while any dovish tilt would give bullion the opportunity to extend its rebound beyond $4,100," said Tzabouras.
Traders are expecting an 80% chance of an increase at the central bank's September meeting.
While gold is typically seen as an inflation hedge, bullion tends to suffer in a high-interest-rate environment due to its non-yielding nature.
Meanwhile, the Bank of England and the Bank of Japan are widely expected to keep rates unchanged this week, and to caution against rising inflation.
Commerzbank on Tuesday lowered its year-end gold price forecast to $4,500 per troy ounce and said it expects silver to reach $67 per troy ounce by the end of the year.
On the geopolitical front, Tehran ruled out Oman's proposal for regional joint management of the Strait of Hormuz, a senior Iranian official told Reuters on Wednesday, dimming hopes for a resolution.
Oil prices were up nearly $3 a barrel on Wednesday after joint strikes in Iraq by the United States and Saudi Arabia.
Elsewhere, spot silver climbed 0.9% to $57.63 per ounce, platinum dropped 1.1% to $1,586.84, and palladium dipped 1.3% to $1,253.18.
Reporting by Sukanya Mitra in Bengaluru; Editing by Louise Heavens and Harikrishnan Nair
Source: Reuters