Gold bars. Picture: REUTERS
Gold bars. Picture: REUTERS

Bengaluru — Gold prices rose slightly on Tuesday ahead of a key US Federal Reserve meeting, as speculation that signs of economic turbulence may prompt the central bank to put brakes soon on its monetary tightening cycle kept the dollar under pressure.

The federal open market committee (FOMC) is widely expected to raise interest rates at its two-day meeting starting later in the day, but the focus will be on its outlook for 2019.

"Investors are hoping gold prices will go up further after the meeting," said Brian Lan, MD managing director at dealer GoldSilver Central in Singapore, adding that $1,251 would be the next level that gold will likely test with support at $1,245.

Spot gold was up 0.2% at $1,248.14 per ounce at 4.36am GMT, while US gold futures inched 0.1% higher to $1,252.2 per ounce.

Meanwhile, the dollar index inched lower after losing 0.4% on Monday, amid speculation the Fed will soon hit the pause button to its monetary tightening cycle in the face of rising risks to global growth.

Lower interest rates reduce the opportunity cost of holding nonyielding bullion and weigh on the dollar.

"The US dollar remains the prime mover for gold prices in the current term," Benjamin Lu, a commodities analyst with Phillip Futures in Singapore, said in a note.

"Though upside potential for gold prices faces impediment from a vigorous dollar, looming economic uncertainties will present optimistic conditions for safe-haven assets beyond 2018."

Also supporting the bullion, Asian share markets slumped on Tuesday, while Wall Street stocks skidded to their lowest levels in more than a year in the previous session.

Spot gold may rise into a range of $1,253-$1,258 per ounce, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.

Among other precious metals, silver was up 0.1 percent at $14.67 per ounce, while platinum fell 0.3 percent, to $791.10 per ounce

Spot palladium slipped 0.2% to $1,255.95 per ounce after touching a record high of $1,269.5 in the previous session.