Gold slipped from a near-two week high on Tuesday as the dollar rose, although hopes for a dovish monetary policy stance from the U.S. 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. U.S. 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 U.S. 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.
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