(Reuters) - 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 1.3% to $1,717.33 per ounce by 10:16 a.m. ET (1416 GMT), climbing for a second straight session. U.S. gold futures rose 1.2% to $1,726.10.
“The expectations of further Fed stimulus are in the forefront of what has 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.
Wall Street indexes opened lower on caution ahead of the central bank meeting that could offer views on the recent signs of economic recovery that drove the tech-heavy Nasdaq to an all-time high. [.N]
Last week’s stronger-than-expected U.S. employment report will most likely be discussed at the two-day 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 more than a year.
Elsewhere, silver dropped 1% to $17.68 an ounce while platinum rose 0.8% to $839.14.
Palladium dipped 4.1% to $1,939.16, with prices of the autocatalyst metal now down over 30% from a record peak in late February.
“The (palladium) market could be more or less balanced due to the very low demand from the automotive industry, and that is probably keeping a check on prices,” said Commerzbank analyst Daniel Briesemann.
Reporting by Asha Sistla and K. Sathya Narayanan in Bengaluru; Editing by Alistair Bell