Gold climbed briefly back above $1,280 an ounce on Wednesday as caution ahead of this week`s confirmation of the new Federal Reserve chair and a policy statement from the bank prompted some to close out bets on falling prices.
Fed Governor Jerome Powell is widely tipped to take over from incumbent Janet Yellen at the head of the U.S. central bank next year. He is seen as a less hawkish and therefore more gold friendly choice than his main challenger John Taylor, a Stanford University economist.
A statement at the end of the Fed`s latest policy meeting due later will also be closely watched for clues on the outlook for U.S. interest rates. While the bank is expected to leave rates unchanged, investors will be watching for any indications that it will press ahead with another increase next month.
Spot gold was up 0.4 percent at $1,275.60 an ounce at 1240 GMT, having earlier peaked at $1,280.87. Its upward move accelerated after it broke through its 100-day moving average at $1,275 an ounce, a key chart level.
The metal has fallen for the last two weeks as the dollar has strengthened, taking it to a three-week low on Friday. While prices have recovered, they remain within a less than $15 an ounce range so far this week as traders await clarity on U.S. monetary policy.
"Coming closer to the end of the year and having two FOMC meetings in a month and half, which could determine the direction of monetary policy, is what has been keeping gold rangebound," Capital Economics analyst Simona Gambarini said.
Gold is highly sensitive to rising U.S. interest rates, as these lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Upbeat earnings reports helped drive global stock markets to the latest in a recent string of record highs on Wednesday, while the dollar steadied against a basket of major currencies ahead of the Fed decision. Oil prices jumped 1 percent. [MKTS/GLOB] [FRX/] [O/R]
U.S. gold futures for December delivery rose 0.5 percent to $1,276.30.
Elsewhere silver gained 1.4 percent to $16.93 an ounce, while platinum climbed 1.3 percent to $927.25 an ounce.
Palladium added 1.3 percent to $992.47 an ounce, off an earlier more than two-week high at $995.90.
The metal rose nearly 5 percent in October and touched a 16-year peak of $1,010.50 an ounce mid-month.
"While we still see prices detached from fundamentally justified levels, we also believe risks are skewed to the upside," Julius Baer said in a note on Wednesday.
"Hence it is not yet the right time to short the market although we remain convinced about a looming correction."
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)