Gold consolidates as Fed meeting looms

Gold prices consolidated within ranges, as investors focused on the U.S. Federal Reserve meeting for clues on policy measures. Market participants weighed the possibility of stepped-up bond buying or a very dovish outlook from the Federal Reserve, which meets on Tuesday and Wednesday.

However, investors have stopped pricing-in the possibility of negative interest rates after Friday's jobs report. Markets have been encouraged by last week's May U.S. jobs report that showed an unexpected decline in the unemployment rate, bolstering views that the worst of the downturn is over and that the economy was moving towards a rebound.

Asian shares surged for the ninth consecutive session as lifting of coronavirus lockdowns in many countries bolstered investor hopes of a relatively quick global economic recovery. However, concerns over the extent of both the short- and longer-term damage to the world economy from the coronavirus pandemic limited the upside. Moreover, fears of renewed trade tensions between the United States and China and the second-round impact from higher unemployment and bankruptcies globally weighed on the outlook.

Spot gold was trading 0.2 percent up at $1,701.46 per ounce by 0748 GMT, having touched a low of $1,670.43 on Friday, its lowest since April 21. U.S. gold futures were flat at $1,705.60. The U.S. dollar steadied near a 3-month low amid fears of deep economic fallout from the coronavirus crisis. The U.S. Treasury yields fell, with the 10-year note down 2.8 basis points at 0.8785 percent.

On Monday, the World Bank stated that the pandemic will cause the global economic output to contract by 5.2 percent in 2020, further warning that its latest projections would be revised downward if uncertainty and shutdowns persist.