Gold scales 1-week high on US stimulus bets, Fed decision awaited

Gold prices inched higher to a one-week top on Wednesday as the metal built on the previous session's gains on growing hopes for further US stimulus and ahead of a closely watched Federal Reserve policy decision.

Spot gold was up 0.1% at $1,855.71 per ounce by 0323 GMT, after hitting its highest since Dec. 9 at $1,857.89. US gold futures rose 0.3% to $1,860.30.

"The markets are just craving anything in terms of a US stimulus package and news that some bipartisanship emerged last night marginally lifted inflation expectations, benefiting gold," said IG Market analyst Kyle Rodda.

Top US congressional leaders met Tuesday evening in an attempt to end a standoff on coronavirus relief with one lawmaker saying talks were moving "in the right direction".

Investors now await the Fed's final policy statement of the year, due at 1900 GMT, where it is expected to keep interest rates pinned near zero and signal where rates are headed in the coming years.

"The unlikely magic ingredient that would see gold prices fly would be if the Fed potentially entertains a yield curve control programme to keep risk-free rates low," Rodda said.

Keeping gold's gains in check was news that Moderna Inc's While speculative interest in gold has waned as traders shift to buoyant equities, a combination of additional stimulus and asset purchases by the Fed would reignite gold bulls' faith in the metal, Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note.

Gold is seen as a hedge against inflation and currency debasement.

Among other precious metals, silver rose 0.6% to $24.63 an ounce, platinum climbed 0.5% to $1,041.47 and palladium gained 0.7% to $2,333.98.