Gold jumped more than 1% on Tuesday as risk appetite took a back seat with cautious investors awaiting clarity on the state of the economy and further stimulus from the U.S. Federal Reserve's policy meeting.
Spot gold gained 1.2% to $1,714.78 per ounce. U.S. gold futures settled up 1% to $1,721.90.
"The expectations of further Fed stimulus are in the forefront of what's been supporting gold over the last couple of days. In addition, we're also seeing global equities tick lower slightly across the board," said David Meger, director of metals trading at High Ridge Futures. "We're seeing unprecedented amount of global liquidity and that underlying fundamental environment is extremely supportive for gold."
Massive global stimulus to limit the economic damage from the coronavirus pandemic has supported gold, considered a hedge against inflation and currency debasement.
Major Wall Street indices fell, while tech-heavy Nasdaq hit a record high for the third straight session ahead of the Fed meeting that could offer views on recent signs of economic recovery.
Last week's stronger-than-expected U.S. employment report will most likely be discussed at the meeting ending Wednesday, while traders have stopped pricing in the possibility of negative interest rates. In April, Fed Chair Jerome Powell said the U.S. economy could feel the weight of the economic shutdown for over a year.
Elsewhere, silver dropped 1% to $17.68 an ounce while platinum rose 0.4% to $835.81.
Palladium dipped 4% to $1,942.62, with prices of the autocatalyst metal now down over 30% from a record peak in late February.
"The corona crisis has led to a collapse in palladium demand, while supply disruptions for platinum outweighed this. Platinum should rise in line with gold, whilst palladium should benefit from a recovery in demand from automobile production," Commerzbank said in a note.