Investing.com - Gold prices rose on Tuesday in Asia as traders awaited the highly-anticipated Federal Reserve meeting that is set to kick off later in the day.
Gold futures for August delivery, traded on the Comex division of the New York Mercantile Exchange, were up 0.2%, at $1,345.35 per ounce by 12:43 AM ET (04:43 GMT).
Although the Fed is not expected to change interest rates on its policy decision on Wednesday, analysts are widely expecting U.S. central bank chief Jerome Powell to present a more dovish outlook.
“No one is seriously expecting the Fed to loosen its belt at this (June) meeting, despite the weakness in core consumer prices in May,” said Fawad Razaqzada, analyst at FOREX.com in London. “However, what we and most other analysts expect is that the Fed will probably use this meeting to prepare the markets for a potential trim in the July and possibly September and/or December meetings.”
Lower interest rates make safe-haven assets such as gold, which does not yield interest, more attractive while weighing on the dollar.
A weaker dollar is also cited as a tailwind for gold prices today. The US Dollar Index, measured against a basket of six currencies, dropped 0.1% to 96.965.
Meanwhile, geopolitical tensions have also supported the safe-haven metal with no signs of a potential de-escalation in trade tensions.
On Sunday, U.S. Commerce Secretary Wilbur Ross emphasized that U.S. President Donald Trump was “perfectly happy” to stick with his current tariff strategy.
Earlier reports suggested that Trump and his Chinese counter Xi Jinping could meet at the upcoming G-20 meeting to discuss trade-related issues, but China so far has not confirmed Xi would be present at the meeting.
Trump has said last week that a trade deal would only be signed if China returned to terms agreed earlier this year.