Gold steady as market awaits Fed policy meeting

GOLD - TOKYO. Gold held steady on Tuesday as market awaits a U.S. Federal Reserve meeting for cues on its monetary policy outlook, while a firmer dollar weighed on the metal's appeal.

Spot gold was flat at $1,780.86 per ounce by 0724 GMT. U.S. gold futures were little changed at $1,780.70 per ounce.

"We're starting to see a bit of a perking up of the U.S. dollar and bond yields as well," DailyFX currency strategist Ilya Spivak said.

The dollar edged up, making gold less alluring for other currency holders, while benchmark U.S. 10-year Treasury yield held close to the 1.570% level.

While no major policy changes are expected from the Fed's two-day policy meeting ending on Wednesday, investors will pay close attention to Chairman Jerome Powell's outlook on the economy.

The Fed slashed its benchmark overnight interest rate to near zero last March after the pandemic hit the United States, and has promised to leave borrowing costs unchanged until the economy reaches full employment and inflation hits 2%.

"The most likely scenario that markets are looking for is a status quo result," Spivak said, adding that, "the Fed is going to have a hard time sounding any more dovish than they already have been."

The Bank of Japan maintained its massive stimulus on Tuesday and projected inflation missing its 2% target for years to come, while new restrictions to counter a surge in COVID-19 cases clouded prospects of a fragile economic recovery.

Palladium edged 0.1% lower to $2,924.67 per ounce, after scaling an all-time high of $2,941 on Monday.

"Pent-up demand in the auto sector is likely to fuel strong demand for PGM (Platinum Group Metals)-rich catalytic converters amid rising restrictions on emissions," ANZ analysts wrote in a note.

Silver fell 0.2% to $26.17 per ounce. Platinum was down 0.3% at $1,240.01.