Gold gains as dollar consolidates ahead of Fed policy meet outcome
Gold prices surged, hovering towards a near 2-week high hit in the previous session, as the greenback consolidated within narrow ranges ahead of a U.S. Federal Reserve policy decision due later in the day.
Spot gold was trading 0.2 percent up at $1,958.85 per ounce by 0632 GMT, having hit a high of $1972.22 on Tuesday, its highest since September 2. U.S. gold futures gained 0.05 percent to $1,966.95.
The dollar index steadied against its rivals as investors cautiously awaited the Federal Reserve’s view on the economy at its policy meeting. The Fed ends a two-day meeting later in the day and markets expect the U.S. central bank to affirm its current zero-interest-rate policy over the next three years.
The U.S. central bank is due to announce its decision at 1800 GMT, followed by a news conference from Chairman Jerome Powell half an hour later.
Asian shares gained as risk sentiment improved following robust industrial output and retail sales data from China and higher U.S. factory production.
China's better-than-expected economic data reinforced investors' perception the Chinese economy is leading the global recovery from the COVID-19 pandemic. Chinese industrial output accelerated the most in eight months in August, while retail sales grew for the first time this year.
U.S. factory production increased for a fourth straight month in August, while U.S. import prices surged more than expected.
U.S. lawmakers remain at an impasse over a new stimulus package amid lingering concerns about the recovery of the U.S. economy from the pandemic. Although U.S. House of Representatives Speaker Nancy Pelosi said Democrats were ready to delay an October recess to get a deal with Republicans on a new coronavirus aid bill.
According to a Reuters tally, more than 29.39 million people have been reported to be infected by the novel coronavirus globally and 928,669 have died.
The demand for the safe-haven metal increased further after the World Trade Organization found that the United States had violated global trading rules by imposing multi-billion dollar tariffs in President Donald Trump’s trade war with China.
The greenback against a basket of currencies traded flat at 93.04, having touched a low of 92.79 on Tuesday, its lowest since September 10. The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.677 percent.