Gold rises as crude oil surges, dollar retreats; Fed meeting on radar

Gold rose on Tuesday on rebound in oil prices and further drop in the U.S. dollar, as the Federal Reserve begins its two-day policy meeting later in the day.

The precious metal hit a low of $1066.05 an ounce, while currently trading around 1062.75, compared to the session’s opening at $1059.38.

Crude oil rebounded from a low of $34.52 a barrel hit on Monday to trade around $36.40, easing some of the pressure from gold.

The U.S. dollar retreated against a basket of major currencies to 97.45, while hit a bottom of 97.22, according to the dollar index.

Some investors preferred to remain sidelined this week ahead of this week’s policy meeting that may witness the first interest rate hike in nearly 10 years.

So far, gold has lost nearly 10 percent this year, set for its third annual loss amid predictions the Fed would hike its borrowing cost.

A rise in the Fed’s borrowing cost should reduce the allure of non-interest bullion and should boost demand on the dollar.

Later in the day, the U.S. will release its inflation data for November that may signal a retreat in CPI to 0.0 percent from 0.2 percent rise in October.

Deflation fears have been one of the key factors negatively affecting gold prices, as gold is known as an inflation hedge.