LONDON: Gold rose on Wednesday in the run-up to a US Federal Reserve policy decision, which is expected to reiterate a dovish monetary policy stance to support the economy's recovery from the coronavirus crisis.
Spot gold was up 0.3% to $1,961.29 per ounce at 10:46 a.m. EDT (1446 GMT), after hitting its highest level since Sept. 2 at $1,973.16.
US gold futures rose 0.1% to $1,968.20.
"The expectations are that the Fed is going to leave the interest rates low for a very extended period of time, and inflation numbers to run over their 2% target rate," said David Meger, director of metals trading at High Ridge Futures.
The Fed policy decision is due at 2 p.m. EDT (1800 GMT). The meeting is its first since the central bank took a more relaxed stance on inflation last month. The policy announcement will be followed by a news conference by Fed Chair Jerome Powell.
Meanwhile, US consumer spending slowed in August, with a key retail sales gauge unexpectedly declining, pointing to a stall in the economic recovery from the effects of coronavirus.
"The weaker economic data supports the idea that the Fed will remain accommodative, that there will be another stimulus put in place by the US Congress, and these are the main pillars of support for gold," Meger said.
Lower US interest rates tend to weigh on bond yields and the dollar, bolstering the appeal of non-yielding gold.
"The precious metals market awaits the latest hurdle for a refreshed rally to be removed," TD Securities said in a note.
"Officials are set to send a dovish signal through the wording on QE (Quantitative Easing), the extension of the dot plot through 2023, and the Chairman's press conference."
Elsewhere, silver eased 0.1% to $27.22 per ounce, while platinum fell 0.7% to $971.17 and palladium slipped 0.4% to $2,401.40.
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