Spot gold eased 0.15 percent at $1,309.93 per ounce at 1:47 p.m. ET. The session high of $1,315.93 was its highest since May 14, 2018. U.S. gold futures rose 0.02 percent to $1,309.10.
Payrolls processor ADP reported that the U.S. private sector added 213,000 jobs in January, beating forecasts for 178,000 new jobs. The dollar held modest gains after the report.
“Better than expected ADP data is pressuring gold. But the metal is still hanging on despite that,” said Bob Haberkorn, senior market strategist at RJO Futures.
The Fed is widely expected to hold interest rates steady after a partial government shutdown impeded key data releases.
“People are also anticipating an easier statement to come out of the Fed,” Haberkorn said, adding that market players will be “waiting to see if today’s statement is more dovish than what the Fed had been saying lately.”
“Although the dollar continues to benefit from safe-haven flows, buying sentiment (for the currency) is seen taking a hit if the Fed sounds more dovish than expected,” Lukman Otunuga, Research Analyst at FXTM said in a note.
Last year, the dollar overtook gold to emerge as investors’ favoured hedge against global economic and political uncertainty, but analysts have said gold is likely to be the preferred safe haven this year.
Overall risk sentiment is also being tested by concerns that Washington’s pursual of a criminal case against Chinese company Huawei and its chief financial officer could hurt trade talks between the world’s two biggest economies.
China’s Vice Premier Liu He is due to meet U.S. Trade Representative Robert Lighthizer later in the day.
Underscoring investor interest in gold, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1 percent to 823.87 tonnes on Tuesday, their highest since June.
SPDR gold holdings have climbed 4.6 percent so far this month, the biggest monthly gain since September 2017.
Silver gained 0.06 percent to $15.85 per ounce. Its session high of $15.98 was the highest since July 2018.
Palladium gained 0.41 percent to $1,351, while platinum fell 0.12 percent at $808.