Gold prices firmed yesterday ahead of a meeting of the United States Federal Reserve where it is expected to signal how big an interest rate cut the world's biggest economy can take.

Spot gold was up 0.1 per cent at US$1,428.61 per ounce by 1143 GMT (7.43pm Singapore time) and US gold futures gained 0.6 per cent to US$1,428.60.

Mitsubishi analyst Jonathan Butler said: "The big question is what the tone of the Fed will be tomorrow. Interest rates are overwhelmingly likely to be cut. It's just a question of by how much."

Investors awaited cues on the Fed's two-day monetary policy meeting beginning later in the session, which is expected to result in a 25 basis point cut in interest rates. If implemented, it would be the central bank's first rate cut in a decade.

The bank would be joining peers such as the European Central Bank in signalling the need for rate cuts.

The Bank of Japan has also said it would ease "without hesitation", if the economy lost momentum.

Gains in the dollar index, which touched a two-month high of 98.206 on the back of a weaker sterling, helped cap the rise in bullion.

Among other precious metals, silver rose 0.1 per cent to US$16.47 per ounce while platinum was steady at US$878.78. Palladium dropped 0.6 per cent to US$1,543.54.

REUTERS