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LONDON — Gold rose yesterday as expectations that the US Federal Reserve will announce its first interest rate hike in nearly a decade were tempered by speculation it would hint at a slow pace for future rises.

Gold prices have fallen 10 percent this year, largely on the back of speculation that US rates will rise from record lows, lifting the opportunity cost of holding non-yielding bullion while boosting the dollar.

They have recovered from near six-year lows this month, however, as attention switched from the timing of the first hike to the pace of future increases.

Spot gold was up 0.5 percent at $1,065.40 an ounce at 10:30 GMT, while US gold futures for February delivery were up $3.10 an ounce at $1,064.70.

“The probability of a rate hike happening is about 80 percent, so quite a lot of that news has already been incorporated into gold prices,” Capital Economic analyst Simona Gambarini said.

“We expect the Fed to be very cautious in the statement, explaining their view that rate hikes will be gradual, and low rates will be here for longer. Everything will be dependent on a strong economic recovery. That will be quite positive for gold.”

The Fed will announce its decision at 19:00 GMT, with markets prepared for a 25 basis point increase to between 0.25 and 0.50 percentage points. Fed chair Janet Yellen will follow the announcement with a policy statement.

In a Reuters poll of more than 90 economists taken between December 4 and 9, the probability that the Fed will raise rates rose to 90 percent.

Yesterday, stock markets rose and the dollar held steady against the euro and a currency basket as investors readied for the expected rise.

Those expectations have led investors to scaling back positions in gold in recent months. Holdings of the world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Trust, are at their lowest since September 2008.

Data from the Commodity Futures Trading Commission (CFTC) showed investors boosted bearish bets on gold to record levels earlier this month, although they have since edged back from that peak. “The gold market is devoid of any funds coming in from gold-backed exchange-traded funds and jewellery demand remains fairly soft,” said INTL FCStone analyst Edward Meir.

Among other precious metals, silver was up 0.6 percent at $13.83 an ounce, having dropped to its lowest in more than six years earlier this week at $13.60 an ounce.

Platinum was up 1.3 percent at $866.25 an ounce and palladium was up 0.1 percent at $565.31 an ounce.— Reuters.