(Reuters) - Gold gained on Tuesday ahead of a U.S. Federal Reserve policy meeting which is expected to provide more monetary stimulus to support the coronavirus-hit economy, though bullion pulled back from an all-time high reached earlier.
As of 11:10 a.m EDT (1510 GMT), spot gold was up by 0.3% at $1,947.51 per ounce, while U.S. gold futures rose 0.93 % to $1,949.00 per ounce.
Gold surged to a record high of $1,980.57 an ounce earlier in the session, but prices have retreated as much as 3.7% since then as investors booked profits and the dollar bounced back.
“When you get a strong momentum coming in, you get a lot of speculators who are looking to turn a quick profit,” said Michael Matousek, head trader at U.S. Global Investors.
“Nothing has changed fundamentally at all, the deficits and lower interest rates stoking inflation are still going to be here, so there is no reason not to own gold really.”
Investors now eye the two-day Fed meeting beginning Tuesday, where it is widely expected to reiterate its accommodative policy stance.
The Fed announced extension of several of its lending facilities through the year-end.
Sharp retreat in gold and silver here
Rising pandemic infections, simmering Sino-U.S. tensions, massive stimulus and a low interest rate environment to aid pandemic-hit economies has helped gold rally 28% so far this year.
Gold prices are expected to rise to $2,300 per troy ounce over the next 12-month horizon, Goldman Sachs said, as concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge.
“We have long maintained gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows,” Goldman said.
The dollar index bounced off a two-year low on Tuesday, but looked primed for further weakness as the United States continued to see a rise in coronavirus cases.
Silver also retreated after rising 6.4% to $26.19 per ounce. It was last down about 1% at $24.37 per ounce..
Platinum fell 0.9%, to $936.90 per ounce and palladium dropped 1.9% to $2,266.64 per ounce.
Reporting by Nakul Iyer and Swati Verma in Bengaluru; Editing by Bernadette Baum