Gold rises nearly 2.0pc, spotlight on Fed meet

Gold prices rose to a two-week high on Tuesday, supported by post-holiday buying from China and concerns over potential US tariffs on pharmaceutical imports, while investors await the outcome of the Federal Reserve's policy meeting, reports Reuters.

Spot gold rose 1.8 per cent to $3,394.39 an ounce, as of 0936 ET (13:36 GMT), its highest since April 22.

US gold futures also reached a two-week high and were last 2.4 per cent up at $3,403.00.

Markets in top consumer China reopened after the Labour Day holiday, which ran from May 1 to 5.

"The bull market is being driven by China's latest gold investing surge, plus the ongoing bid from central banks wanting to cut their exposure to US assets, most especially the dollar," said Adrian Ash, BullionVault director of research in a note.

The dollar struggled as investors began to grow impatient over hoped-for US trade deals, making greenback priced-gold less expensive for other currency holders.

Bullion, widely viewed as a hedge against uncertainty, has hit multiple record highs this year amid market jitters sparked by tariff developments.

US President Donald Trump on Monday signalled that he plans to announce new tariffs on pharmaceutical products over the next two weeks. Earlier on Sunday, Trump had announced 100 per cent tariffs on movies produced overseas.

"We think there is increased participation from speculators in China. In the West, we think that despite the fact that prices are overbought, gold is significantly under-owned. Both of these factors should underscore stronger gold prices," TD Securities commodity strategist Daniel Ghali said.

"Prices can trade up to $4,000 an ounce this year."

Meanwhile, investors are closely watching the Fed's upcoming policy decision on Wednesday, with Chair Jerome Powell's remarks expected to offer clues on the potential timing of interest rate cuts.

Higher interest rates decrease gold's attractiveness as it is a zero-yielding asset.

Elsewhere, spot silver gained 2 per cent to $33.16 an ounce, platinum rose about 2.3 per cent to $981.44 and palladium added 2.5 per cent to $964.45.