Gold prices rose on Tuesday as the dollar remained subdued, with investors turning their focus to a U.S. Federal Reserve monetary policy meeting, seeking details of its plans on inflation targeting.
Spot gold was up 0.3% at $1,962.78 per ounce by 0259 GMT, adding to a 0.8% gain in the previous session. U.S. gold futures climbed 0.5% to $1,972.60.
“Gold looks firm mainly because of a weaker dollar and also U.S. Treasury yields are coming down a bit,” said Edward Meir, an analyst at ED&F Man Capital Markets.
The dollar index slipped against its rivals after its worst session in more than two weeks, making gold less expensive for holders of other currencies.
Market participants now await the U.S. Fed’s two-day policy event which ends on Wednesday, its first such meeting since Chairman Jerome Powell unveiled a policy shift towards greater tolerance of inflation, effectively pledging to keep interest rates low for longer.
“After the Jackson Hole symposium, the market is asking for a bit more colour around by what means the Fed plans to stoke inflation,” said IG Markets analyst Kyle Rodda.
“Further still, it is also asking for some indication that the Fed will continue to suppress risk-free rates, if inflation does begin to seriously emerge.”
Gold, which has risen nearly 29% this year, is seen as a hedge against inflation. Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
U.S. Treasury Secretary Steven Mnuchin and Jerome Powell will testify before the Senate Banking Committee on coronavirus relief, the committee said in a statement on Monday.
Elsewhere, platinum rose 0.5% to $958.48 per ounce after hitting its highest since Aug. 18 at $966.
Silver gained 0.7% to $27.35 and palladium was up 0.3% at $2,318.80.
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