* Silver rises to over 7-year peak
* Dollar drops to near 2-year lows
* Fed's two-day policy meeting ends Wednesday (Adds comments, details, updates prices)
By Brijesh Patel
July 28 (Reuters) - Gold jumped more than 1.5% to hit a record and marched towards the $2000 level on Tuesday, boosted by a weaker dollar and expectations of a long, dovish stance from the U.S. Federal Reserve as economic pain from the COVID-19 pandemic grows.
By 0254 GMT, spot gold
One of the major factors for gold's run is the weakening of the dollar ahead of the Fed meeting, which is expected to reiterate an "accommodative" stance, said Michael McCarthy, chief strategist at CMC Markets.
"We've got increasing global worries, particularly in U.S.-China relations, but also further outbreaks tampering economic recovery, and then highly liquid environment, so the precious metals are making sense to a lot of investors."
The dollar index held near a two-year low as investors worried about the damage from the novel coronavirus to the U.S. economy and awaited the passage of a new fiscal rescue package. [USD/]
Bullion's gains also came despite an uptick in equities as investors focus on the Fed's two-day policy meeting ending Wednesday. [MKTS/GLOB]
"(This FOMC meeting) is expected to discuss implementing dovish forward guidance which gold investors would consider supportive as real yields, the key driver of gold, would be expected to remain at record lows," Phillip Futures analysts said in a note.
Lower bond yields reduce the opportunity cost of holding non-interest bearing gold.
Gold's safe-haven appeal was also lifted on deteriorating U.S.-China ties and dimming hopes of a quick economic recovery as the virus showed no signs of slowing.
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