Gold rose above $1,180 an ounce on Wednesday as the dollar fell ahead of the Federal Reserve's latest policy statement, which is expected to give more clues about the timing of an expected US interest rate rise. The metal edged back above its 200-day moving average at $1,172 an ounce, a key chart level that it breached this month for the first time since May. Spot gold rose as much as 1.3 percent to $1,182.50 an ounce - its highest in nearly two weeks - and was up 1.1 percent at $1,179.65 by 1436 GMT. US gold futures for December delivery climbed by $14.40 an ounce to $1,180.20.
The Fed is expected to keep interest rates on hold when its two-day policy meeting concludes at 1800 GMT and may struggle to convince investors it can tighten monetary policy before the end of the year in the face of US and global economic pressures. "As economies are so inter-correlated, it is difficult to see the Fed raising rates this year, when China, Japan and the euro zone are still on the monetary expansion pattern," ActivTrades chief analyst Carlo Alberto de Casa said. "For that reason, I can't see gold falling below $1,100 until the end of the year."
Expectations that the Fed was on track to raise interest rates for the first time in nearly a decade, lifting the opportunity cost of holding non-yielding bullion while boosting the dollar, helped to push gold to 5-1/2 year lows in July. The metal has since rebounded after a string of disappointing US data and as concerns grew over growth elsewhere in the world, particularly China. The Fed held off raising rates last month, citing global concerns. Fed Chair Janet Yellen has since said that the bank would still increase rates this year, though some other policymakers have said otherwise.
Gold took support on Tuesday from data showing a second straight drop in a gauge of US business investment in September and a decline in consumer confidence this month. "Weak US economic data lent weight to the notion the Fed would refrain from raising rates any time soon, which in turn supported bullion," HSBC said in a note. From a technical perspective, Commerzbank said in a weekly report that gold is consolidating after reaching the 50 percent retracement of the drop from its January highs to its July low. Dips lower are expected to hold at around $1,150 to $1,135 for another leg higher to then take hold, it said. Silver rose 2.9 percent to $16.27 an ounce, while platinum was up 2.1 percent at $1,003.80 and palladium climbed 1.8 percent to $686.45.
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