Gold extends gains as investors remain cautious ahead of Fed meeting outcome

Gold prices rose, extending gains for the third straight session as global equity markets trimmed gains, while U.S. Treasury yields declined ahead of the outcome of the Federal Reserve’s meeting that is expected to shed light on the strength of the economy and clues on further stimulus.

Spot gold was trading 0.2 percent up at $1,717.31 per ounce by 0753 GMT, having touched a low of $1,670.43 on Friday, its lowest since April 21.  U.S. gold futures edged up 0.1 percent to $1,723.60.

Asian equities eased as doubts about the global recovery from the pandemic returned ahead of the U.S. Federal Reserve meeting. Investors adopted a cautious stance and await the Fed’s monetary policy statement due later in the day, followed by a press conference from Chairman Jerome Powell. The policymakers will also publish their first economic projections since the pandemic set off a recession in February.

The Federal Reserve has cut interest rates near zero and unveiled a raft of stimulus measures to limit the economic damage from COVID-19. Investors speculate the U.S. Federal Reserve could take steps to curb a recent rise in bond yields at its policy meeting.

The yield on benchmark 10-year Treasury notes was little changed at 0.8270 percent. On Tuesday, long-term Treasury yields fell and the yield curve flattened slightly as traders adjusted positions before the Fed meeting. The greenback against a basket of currencies traded 0.2 percent down at 96.22, having touched a low of 96.11 earlier, its lowest since March 12.