Commodity markets staged a recovery on Tuesday but trading was cautious ahead of a crucial interest rate setting meeting at the US Federal Reserve. After Monday’s sharp sell-off, sentiment remained fragile and risk appetite was muted.

Gold ended European trading 0.4 per cent firmer at $1,004.70 per troy ounce after trading between $994.75 and $1,012.30 as dealers speculated about the size of the expected rate cut and further measures that could be taken to shore up confidence across financial markets.