(Bloomberg) -- Gold (GC=F) held near $4,000 an ounce as traders prepared for a Federal Reserve decision this week that's expected to keep interest rates steady.

Most Read from Bloomberg

Bullion was little changed, having added 0.5% in the previous session. Oil fell for a second day as a new round of diplomatic efforts raised hopes that an escalation of the US-Iran might be averted, while stocks were set to rise as enthusiasm for artificial intelligence revived following a selloff last week.

Still, gold remains under pressure. Alongside inflationary concerns from stubbornly high energy prices, the precious metal was caught up in the broader unwind of the AI trade, with investors selling it to cover losses elsewhere when technology stocks tumbled. On Friday, the metal dropped to its lowest since mid-July.

"Gold will need to establish a floor, as higher oil prices keep inflation risks in focus and the potential for further rate tightening weighs on the metal," Suki Cooper, global head of commodities research at Standard Chartered Plc, wrote in a note. "Prices are at a critical juncture," she said, adding that support would fade quickly if the metal doesn't find technical support at $3,886 an ounce.

Expectations around the Fed's interest-rate path have shifted over the past month, adding to uncertainty around the near-term prospects for gold. Traders initially raised bets on an October hike after hotter-than-expected inflation prints, before comments by central bank officials reined in the wagers.

The market is now pricing in a roughly 10% chance that the US central bank will increase rates this week, although elevated energy prices are still prompting bets on a hike before year-end. Higher borrowing costs are a headwind for gold, which doesn't pay interest.

Spot gold edged down 0.2% to $4,007.66 an ounce at 7:47 a.m. in Singapore. Silver slipped 0.1% to $53.90 an ounce. Platinum and palladium were little changed. The Bloomberg Dollar Spot Index, a gauge of the US currency, was marginally higher.

Most Read from Bloomberg Businessweek

©2026 Bloomberg L.P.