BENGALURU - Gold prices were steady, having touched a one-week high on Tuesday, ahead of a key U.S. 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.
"A lot of investors are expecting that the Fed will defer interest rate hikes and may not look to raise them quickly," said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
"Investors are hoping gold prices will go up further after the meeting. $1,251 would be the next level that gold will likely test with support at $1,245."
Spot gold was steady at $1,245.56 per ounce at 0712 GMT. Prices touched their highest since Dec. 11 at $1,249, earlier in the session.
U.S. gold futures inched 0.2 percent lower to $1,249.6 per ounce.
Meanwhile, the dollar was fragile in Asian trade as markets speculated growth worries would prompt the Federal Reserve to signal a pause to its monetary tightening cycle at this week's meeting.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.
"The U.S. 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 flat at $14.66 per ounce, while platinum slipped 0.6 percent to $789.00 per ounce.
Spot palladium declined to $1,256.80 per ounce, after touching a record high of $1,269.5 in the previous session.