Gold edged up on Tuesday after two sessions of losses, as the dollar and shares eased ahead of a U.S. Federal Reserve policy meeting that may push back expectations for when U.S. interest rates will start to rise.
The Fed starts its first two-day policy meeting of the year later on Tuesday and investors expect it to acknowledge the uncertain global outlook and stick to its promise to be patient on tightening.
Spot gold was up 0.5 percent at $1,287.30 an ounce. The metal had fallen 1.6 percent in the previous two sessions on strong equities and uncertainties over the Greek election. Gold hit a five-month high of $1,306.20 on Thursday."The bullion market's focus may shift to the upcoming FOMC two-day meeting on 27-28 January,'' said James Steel, an analyst with HSBC, referring to the U.S. Federal Reserve's Federal Open Market Committee.
"In the near term, bullion may continue to consolidate from gains made earlier in the year,'' Steel said. Investors will be watching the Fed meeting for clues about the timing of any interest rate increase.
The general assumption is the Fed will acknowledge the uncertain global outlook and stick to its promise to be patient on tightening.
Its timetable remains for an increase in rates by mid-year, a move that could further boost the dollar and hurt bullion, a non-interest-bearing asset.