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Gold dips on stronger dollar, Fed meet in focus

Gold prices eased on Tuesday as the dollar held near multi-month highs, while investors awaited outcome of a two-day US Federal Reserve policy meeting, where the central bank is widely expected to reduce interest rates.

Spot gold fell 0.3 per cent to $1,422.81 per ounce at 0128 GMT.

US gold futures gained 0.2 per cent to $1,422.50 an ounce.

The dollar was up 0.1 per cent, hovering near a two-month high hit in the previous session, making gold expensive for holder of other currencies.

The US Fed begins a two-day policy meeting later on Tuesday, at which it is widely expected to lower interest rates by 25 basis points. If implemented, it would be the central bank's first rate cut in a decade.

Japan's central bank is expected to keep monetary policy on hold at a meeting ending later on Tuesday, but some investors say there is a chance Japan's central bank could change its forward guidance to reassure traders that rates will remain low.

The US-China trade negotiations are due to begin in Shanghai on Tuesday, although expectations for progress during the two-day meeting are low.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.83 per cent to 824.89 tonnes on Monday from 818.14 tonnes on Friday.

Asian stocks edged up on Tuesday as equity investors prepared for an expected US interest rate cut this week.

There is a growing risk of a no-deal Brexit where Britain exits the European Union without a trade deal in place. There is also a chance that new Prime Minister Johnson will call an early election.

Courtesy - Reuters

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