Gold scales two-week high ahead of Fed's meeting

Gold prices rose in European trade, extending gains for the fourth straight session and scaling a two-week high as the dollar loses ground against a basket of major rivals.

The decline comes ahead of the Federal Reserve's policy meeting later today, expected to hold interest rates unchanged in order to assess economic developments. 

Gold Prices Today

Gold prices rose 0.1% to $1,935 an ounce, the highest since September 5, with a session-low at $1,929, after rising 0.5% yesterday, the third profit in a row as the dollar slows down.

The Dollar

The dollar index fell 0.1% on Tuesday, extending losses for the third session away from a six-month high against a basket of major rivals.

Dollar is losing ground as investors shun new positions ahead of the Federal Reserve's meeting, which is expected to provide important clues on the future path of interest rates.

The Fed

Later today, the Federal Reserve will hold its policy meeting, expected to maintain interest rates flat at 5.5%, the highest in 22 years.

The decisions will be followed by Fed Chair Jerome Powell's speech, which could provide important clues on the likely path ahead for monetary policies.

US Rates

Pricing for a US 0.25% interest rate hike this week stands at 1%, while pricing for a similar hike in November stands at 31%.

Estimates

Analysts believe that gold prices are carrying strong momentum as global central bank pull back from their policy tightening marathons.

Future US and European data especially on consumer prices and retail sales will offer more clarity on this issue.

Chinese Gold Prices

Gold prices in China hit record highs last week as consumers buy up the safe haven to compensate the declining yuan values.

The SPDR

Gold holdings at the SPDR Gold Trust remained flat yesterday at a total of 880.27 tonnes.