Gold rises above $4,050 as Wall Street gains ahead of Fed rate decision

Spot gold and silver posted gains in late U.S. trading on Tuesday, recovering from early losses as crude oil prices fell and inflation concerns eased. At the latest afternoon reading, gold was near $4,058.20 an ounce, up about 1.05%, and silver traded around $54.20 an ounce, up 0.66%.

U.S. economic reports showed continued consumer confidence and business investment despite higher borrowing costs. Durable goods orders for September rose 1.8%, and the consumer confidence index jumped to 91.7 in October, surpassing expectations. New-home sales slipped slightly but remained above forecasts, while the Richmond Fed manufacturing index stayed at minus 2.

Market participants are positioning for an expected pause in Federal Reserve rate hikes at the Oct. 27-28 meeting, with futures indicating a roughly 90% probability of no change to the benchmark range of 3.75%-4.00%. However, a majority of traders still see a chance of another increase by year-end.

"The Fed's decision on Wednesday will be closely watched for signals on whether the October pause is temporary or marks a longer-term shift in policy," a market analyst noted.

Oil prices retreated, with Brent near $114 a barrel and WTI around $100, after diplomatic talks involving Iran, Saudi Arabia, Turkey and Pakistan eased some geopolitical risk in the Gulf. The softer energy market reduced oil-driven inflation worries, helping bullion recover despite a firmer U.S. dollar, which was near 102.2 on the index.

North American equity markets closed modestly higher, led by technology and semiconductor stocks, while European benchmarks also posted gains after earlier declines. Treasury yields were largely unchanged, with the 10-year note around 4.99%.

Technical analysis suggests gold could test resistance near $4,080-$4,100, with further upside toward $4,160, while downside support lies near $4,040-$4,015. Silver's next resistance is around $54.5-$55.8, with support near $53.