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Gold prices held steady on Tuesday as bond yields fell a day before the U.S. Federal Reserve's widely expected 75-basis-point rate hike.

Spot gold was little changed at $1,719.77 per ounce by 1001 GMT. U.S. gold futures fell 0.1% to $1,718.00.

"Gold is slightly higher benefiting from slightly lower U.S. interest rates," said UBS analyst Giovanni Staunovo.

The U.S. Federal Reserve is expected to raise interest rates by 75 basis points at the conclusion of its policy meeting on Wednesday. A hike of that magnitude would effectively close out pandemic-era support for the economy.

"We expect a further lift to real interest rates this year, particularly as inflationary risk fades in 2H22. As such, additional liquidation of exchange-traded funds can be expected," Staunovo said adding UBS expects gold to fall to $1,600/oz by year-end.

While a 75 bps increase has already been priced in by markets, if the central bank comes across as dovish amid growing speculation about a potential recession, it could weaken the dollar and boost gold further, according to analysts.

Traders have dialled down bets of a 100 bps hike following recent weak economic data.

"We're not really seeing a tremendous amount of directional conviction here. It seems like the market is most importantly waiting for the Fed announcement," said Ilya Spivak, a currency strategist at DailyFX.

Rising interest rates raise bond yields, increasing the opportunity cost of holding non-yielding bullion.

Meanwhile, the European Central Bank may not be done with big rate hikes after its initial half-point increase last week, Latvian central bank governor Martins Kazaks said in an interview with Bloomberg News.

Elsewhere, spot silver rose 0.6% to $18.51 per ounce, platinum was up 0.1% at $880.04.

Palladium was flat at $2,006.78.