Gold prices were on track to register their best month since March on Wednesday led by geopolitical concerns and hopes of an interest rate cut in September as focus shifted to the U.S. Federal Reserve's upcoming policy decision.

Spot gold was up 0.7% at $2,424.29 per ounce, as of 1341 GMT, and has gained more than 4% this month. U.S. gold futures were up 0.7% to $2,422.50.

The Fed is expected to leave rates unchanged as it concludes its two-day meeting later in the day, but could also hint that a reduction in borrowing costs could come as soon as September.

"If they do have something more concrete on rate cuts coming gold should trade up north of $2,500 but if they kind of leave it dragging along, I expect gold to sell off a bit," said Bob Haberkorn, senior market strategist at RJO Futures.

"But there's so much geopolitical concern out there right now and concerns on economic issues that gold will form a pretty good base here down around $2,400."

Hamas leader Ismail Haniyeh was assassinated early on Wednesday morning in Iran, the Palestinian militant group and Tehran said, drawing threats of revenge on Israel in a region already shaken by the war in Gaza and a deepening conflict in Lebanon.

Helping non-yielding bullion further, the dollar index slipped, and benchmark U.S. 10-year Treasury yields hit their lowest in more than four months.

"While investors wait for Fed rate cuts to take a more constructive view on gold, positioning on silver has been more bullish due to its link to green technologies," BofA said in a note.

Believe silver should outperform gold because it is more sensitive to manufacturing activity, BofA added.

Spot silver was up 1.6% at $28.83 per ounce. The metal is set for a second straight monthly loss.

Platinum gained 1.3% to $971.55 and palladium climbed 4.5% to $929. However, both the metals were headed for a monthly decline.

(Reporting by Rahul Paswan in Bengaluru; Editing by Shounak Dasgupta)