NEW YORK: Gold edged lower from a near-two week high on Tuesday as the dollar rose, although hopes for a dovish monetary policy stance from the US Federal Reserve limited the safe-haven metals' losses. Spot gold was down 0.1% to $1,955.21 per ounce at 1:52 p.m. EDT (1752 GMT), after earlier climbing to its highest since Sept. 2 at $1,971.71.
US gold futures settled up 0.1% at $1,966.20. "The dollar bounced off the lows and we're seeing some sell-off in gold, but this is temporary, dovish comments from the Fed meeting and a further explanation on their new inflation targets could push gold above $2,000," said Bob Haberkorn, senior market strategist at RJO Futures.
The dollar index rose against rivals, making gold more expensive for buyers holding other currencies. Investors are now awaiting a statement from the Fed's two-day policy event, which ends on Wednesday. "There is more optimism because investors are thinking the low interest rates we have can continue for the next three-plus years; that's very bullish for gold," said Michael Matousek, head trader at US Global Investors.
Meanwhile, a group of Democratic and Republican members of US Congress unveiled a $1.5 trillion bipartisan coronavirus relief legislation, which they hoped would break a deadlock. Unprecedented monetary stimulus and a low interest rate environment have led bullion to gain 29% this year, as it is seen as a hedge against inflation and currency debasement.
Elsewhere, silver rose 0.2% to $27.20 per ounce, while palladium climbed 3.8% at $2,400.25, having hit its highest since March 31 at $2,419.19. Platinum rose 1.7% to $970.47, after hitting its highest since Aug. 11 at $973.98.
Platinum could outperform gold by about 10%, if the World Platinum Investment Council's forecasts for a supply deficit come to pass and the gold-to-platinum ratio breaks out of the 2.02-2.20 range, said Saxo Bank analyst Ole Hansen.
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