GLD

Gold pauses as markets seek confirmation on Fed policy

Credit: REUTERS/CHINA STRINGER NETWORK

Gold eased on Wednesday as investors booked profits from a record run and caution set in as investors awaited the end of a U.S. Federal Reserve meeting expected to reinforce dovish policy to aid a virus-hit economy.

* Holdings in SPDR Gold Trust at seven-year peak

* Silver eases from multi-year high

* Interactive graphic tracking global spread of coronavirus: open https://tmsnrt.rs/3aIRuz7 in an external browser (Recasts, adds comments, updates prices)

By Eileen Soreng

July 29 (Reuters) - Gold eased on Wednesday as investors booked profits from a record run and caution set in as investors awaited the end of a U.S. Federal Reserve meeting expected to reinforce dovish policy to aid a virus-hit economy.

Spot gold was down 0.1% to $1,956.46 per ounce by 0946 GMT. Prices hit a record $1,980.57 on Tuesday. U.S. gold futures firmed 0.5% to $1,953.40.

"When you're sitting on a very large profit, people want to take that," independent analyst Ross Norman said, adding the market was in a holding pattern ahead of the Fed's policy statement due at 2 pm EDT (1800 GMT).

Investors were also monitoring a political deadlock in the U.S. Congress over a $1 trillion aid plan.

"They're going to have to apply more stimulus in an economy struggling to get itself out of a hole and if they do increase monetary injection, it's going to be gold positive," Norman added.

Gold, considered a refuge against inflation and currency debasement following widespread stimulus, tends to benefit from low interest rates, which reduces the opportunity cost of holding the non-yielding metal.

Fed Chair Jerome Powell "may also comment on plans to anchor long-term interest rates at a low level by adjusting the forward guidance and possibly conducting yield curve control," Commerzbank said in a note.

"This would cement the negative real interest rates, in which case new record highs for gold and an increase above $2,000 per troy ounce would only be a question of time."

Investors continued to pile into gold-backed exchange-traded funds, with holdings in the SPDR Gold Trust at an over seven-year peak.

Gold also tracked moves in rival safe-haven the dollar , which lingered near a two-year low. [USD/]

Silver dropped 1% to $24.33 per ounce, platinum was 0.1% higher at $949.43 and palladium slipped 1.4% to $2,251.76. (Reporting by Eileen Soreng in Bengaluru; editing by Barbara Lewis) ((eileen.soreng@thomsonreuters.com; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 6131; Reuters Messaging: eileen.soreng.thomsonreuters.com@reuters.net)) Keywords: GLOBAL PRECIOUS/ (UPDATE 4)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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