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PRECIOUS-Gold prices rise ahead of U.S. Fed policy decision
Published at 16/09/2020 at 18:52

* Fed's policy decision due at 2 p.m. EDT/1800 GMT

* U.S. consumer spending slowed in August

* Interactive graphic tracking global spread of coronavirus: open in an external browser

(Updates prices)

By Sumita Layek

Sept 16 (Reuters) - Gold rose on Wednesday in the run-up to a U.S. Federal Reserve policy decision, which is expected to reiterate a dovish monetary policy stance to support the economy's recovery from the coronavirus crisis.

Spot gold rose 0.3% to $1,960.60 per ounce at 1:42 p.m. EDT (1742 GMT), after hitting its highest since Sept. 2 at $1,973.16.

U.S. gold futures settled up 0.2% to $1,970.50.

"The expectations are that the Fed is going to leave the interest rates low for a very extended period of time, and inflation numbers to run over their 2% target rate," said David Meger, director of metals trading at High Ridge Futures.

The Fed policy decision is due at 2 p.m. EDT (1800 GMT). The meeting is its first since the central bank took a more relaxed stance on inflation last month. The announcement will be followed by a news conference by Fed Chair Jerome Powell.

Meanwhile, U.S. consumer spending slowed in August, pointing to a stall in the economic recovery from effects of the coronavirus.

"The weaker economic data supports the idea that the Fed will remain accommodative, that there will be another stimulus put in place by the U.S. Congress; these are the main pillars of support for gold," Meger said.

Lower interest rates tend to weigh on bond yields and the dollar, bolstering the appeal of non-yielding gold.

"The precious metals market awaits the latest hurdle for a refreshed rally to be removed," TD Securities said in a note.

"Officials are set to send a dovish signal through the wording on QE (Quantitative Easing), the extension of the dot plot through 2023, and the Chairman's press conference."

Elsewhere, silver eased 0.2% to $27.19 per ounce, platinum fell 1.5% to $963.59 and palladium slipped 1% to $2,385.91.

(Reporting by Sumita Layek in Bengaluru Editing by Paul Simao and Tom Brown)

((Sumita.Layek@thomsonreuters.com; Within U.S. +1 646 223 8780, Outside U.S. +91 8061822693; Reuters Messaging: Sumita.Layek.thomsonreuters.com@reuters.net))