Gold recovers as Middle East tensions buoy demand; Fed meeting in focus
NEW YORK: Gold prices rebounded on Tuesday, as rising tensions between Israel and Iran buoyed demand for the safe-haven asset, while investors looked forward to the outcome of the US Federal Reserve's policy meeting this week.
Spot gold rose 0.5 per cent at US$3,399.90 an ounce, as of 0048 GMT, after dropping more than 1 per cent in the previous session.
US gold futures edged 0.1 per cent higher to US$3,419.20.
Israel and Iran attacked each other for a fifth straight day on Tuesday, and US President Donald Trump urged Iranians to evacuate Tehran, citing what he said was the country's rejection of a deal to curb nuclear weapons development.
On Monday, an Israeli strike hit Iran's state broadcaster and the head of the U.N. nuclear watchdog also indicated extensive damage to Iran's biggest uranium enrichment plant.
Gold is considered a safe-haven asset during times of geopolitical and economic uncertainty.
Investors will look forward to a host of central bank monetary policy decisions this week, with the spotlight on the Fed.
The US central bank is widely expected to keep interest rates unchanged at the end of its policy meeting on Wednesday.
Its Chair Jerome Powell's comments following Fed's interest rate decision will be eagerly watched for more cues on the rate cut path.
Stock indexes closed higher after last week's losses and a barrel of oil got US$1 cheaper on Monday as investors took heart from reports that Iran was seeking to end hostilities with Israel.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.15 per cent to 941.93 tonnes on Monday from 940.49 tonnes on Friday.
Elsewhere, spot silver was up 0.1 per cent at US$36.35 per ounce, platinum fell 0.3 per cent to US$1,242.03, while palladium eased 0.2 per cent to US$1,027.50.
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