Gold prices remained steady on Tuesday as market participants shifted focus from the US Federal Reserve’s widely anticipated interest rate cut this week to the outlook for monetary policy in 2026. Bullion was trading just above $4,200 an ounce, after ending the previous session marginally lower.

Meanwhile, US 10-year Treasury yields climbed to their highest level in over two months on Monday. The rise in yields comes as investors brace for a series of bond auctions and the Fed’s policy decision on Wednesday, which is expected to offer clearer guidance on the interest rate trajectory for the coming year.

Swap traders are currently pricing in a quarter-point rate cut by the Fed this week. However, expectations for further easing have softened, with markets now leaning toward two additional cuts by the end of 2026. This marks a downgrade from three cuts that were being signaled barely a week ago.

Adding to the uncertainty, Kevin Hassett, a leading candidate to take over as the next Fed chair, said it would be irresponsible to outline a detailed rate plan for the next six months. Higher interest rates typically weigh on gold prices, as the metal does not offer any interest income.

Despite the recent consolidation, gold has posted a strong performance this year, gaining roughly 60%. The rally has been driven by substantial central bank buying and strong inflows into gold-backed exchange-traded funds. Although prices have pulled back from their late-October peak of above $4,380 an ounce, the yellow metal continues to find support from expectations of lower global interest rates and persistent economic uncertainty.