Gold slips as dollar recovers; all eyes on Fed meeting

Gold slipped 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 fell 0.3% to $1,950.92 per ounce at 10:35 a.m. EDT (1435 GMT), after earlier climbing to its highest since Sept. 2 at $1,971.71. US gold futures eased 0.2% to $1,959.20.

"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 0.1%, 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 50 Democratic and Republican members of Congress are due to unveil $1.5 trillion bipartisan coronavirus relief legislation on Tuesday.

Unprecedented monetary stimulus packages and a low interest rate environment have led bullion to gain over 28% so far this year, as it is seen as a hedge against inflation and currency debasement.

Elsewhere, platinum rose 0.3% to $956.83 per ounce, after hitting its highest since Aug. 11 at $973.70.

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.

Silver was flat at $27.15 per ounce and palladium was up 1.5% at $2,349.03.