Sept 21 (Reuters) – Gold extended gains on Tuesday on the back of a subdued dollar, while investors were focused on the start of a Federal Reserve meeting that could provide clues on the central bank’s timeline for eventually cutting its stimulus for the U.S. economy.
Spot gold XAU= was up 0.8% to $1,777.76 per ounce by 1441 GMT (10:41 a.m. EDT), while U.S. gold futures GCv1 were up 0.8% to $1,777.00.
The posture for bullion is upbeat on safe-haven demand as there’s still anxiety over whether sell-offs in risky assets will resume, amid support from a weaker dollar, although the current rebound in equities is limiting gold’s gains, said Jim Wyckoff, senior analyst at Kitco Metals
The dollar .DXY eased off a one-month peak hit in the previous session, making gold cheaper for those holding other currencies.
But the technical picture for gold “remains near-term bearish … We may be seeing shorter-term futures traders that have been short maybe evening up and doing some short covering ahead of the FOMC,” Wyckoff added.
The Federal Open Market Committee will release a policy statement and new economic projections at the end of its meeting on Wednesday. Some analysts believe it could announce the start of the tapering of its asset purchases in the fourth quarter, which could push gold lower.
Reduced central bank stimulus and interest rate hikes tend to lift bond yields, raising the opportunity cost of holding non-interest bearing gold. It would also help boost the dollar, further weighing on bullion.
“The big question that needs to be answered is will the current market uncertainty change any prospective timeline that the Fed might have when it comes to announcing its tapering of asset purchases,” said Michael Hewson, chief market analyst at CMC Markets UK.
Silver XAG= rose 1.3% to $22.53 per ounce, platinum XPT= climbed 3.9% to $945.80, and palladium XPD= gained 1.% to $1,905.23. Get more news at XM membership area