Gold hits more than 1-week low on doubts over stimulus bill, firm dollar

Gold prices fell to a more than one-week low on Wednesday, pressured by concerns over the US stimulus bill and strength in the dollar as markets awaited the Federal Reserve's latest policy decision.

Spot gold fell 0.4% to $1,843.30 per ounce by 10:18 a.m. EST (1518 GMT), having earlier touched its lowest since Jan. 18. US gold futures eased 0.5% to $1,840.90.

"Ahead of the Federal Open Market Committee's statement, you are having lower equities and the dollar is catching a bit of a bounce," which is weighing on the gold market, said Bob Haberkorn, senior market strategist at RJO Future.

The dollar rebounded to an over one-week high against key rivals, making gold costlier for investors holding other currencies.

Also, "the $1.9 trillion (US stimulus) was pretty ambitious and I don't think (President) Biden has the support to pass it," Haberkorn added. "That is another reason why gold is not trying to get back above $1,900."

The Biden administration's stimulus plan was facing strong opposition from Republicans over the size of the package.

The Federal Reserve is expected to reinforce its commitment to accommodative monetary policy to aid the virus-hit economy in its policy decision due at 1900 GMT.

"To drive gold towards the upper end of the (narrow) range, (the Fed) will need to adopt a fairly dovish tone, which will push US 10-year yields back below 1% - that will help gold," CMC Markets UK's chief market analyst Michael Hewson said.

Easy monetary policy tends to weigh on government bond yields, increasing the appeal of non-yielding gold.

Silver fell 1.1% to $25.16 an ounce. Platinum shed 2.6% to $1,069.61, having touched its lowest since Jan. 12 at $1,056.70.

Palladium fell 0.2% to $2,320.33 per ounce, having touched its lowest since Dec. 21 at $2,292.90 earlier in the session.