Investing.com - Gold prices edged higher on Wednesday, as investors looked ahead to the outcome of the Federal Reserve's policy meeting, the last under the leadership of Janet Yellen before she hands the chairmanship over to Jerome Powell.
Comex gold futures were up around $7.00, or 0.5%, to $1,342.30 a troy ounce by 3:00AM ET (0800GMT). It fell to a one-week low of $1,332.80 in the last session.
Meanwhile, silver futures tacked on 16.7 cents, or about 1%, to $17.22 a troy ounce, after hitting a one-week low of $17.04 a day earlier.
The dollar saw renewed selling pressure, falling almost 0.4% against a basket of six major currencies to 88.68 in early trade and sliding back towards its weakest level since Dec. 2014.
Treasury yields eased down after running up to their highest level in almost four years, with the benchmark 10-year note dipping to 2.699%.
The Fed is widely expected to keep interest rates unchanged. Investors, however, will be focusing on the central bank's policy statement for hints on the monetary policy outlook.
The majority of economists believe that the U.S. central bank will hike rates in March, followed by another hike in June, with a third move higher arriving in December.
Gold is highly sensitive to rising rates, which increase the opportunity cost of holding nonyielding bullion.
Besides the Fed, investors also looked ahead to key U.S. economic data due later in the session for fresh clues on the likely trajectory of monetary policy in the months ahead.
The highlight of Wednesday's economic calendar will be the ADP jobs report at 8:15AM ET (1315GMT), which is often seen as a warmup act for the big Friday government nonfarm payrolls report.
There is also the Chicago PMI survey at 9:45AM ET (1345GMT) and a report on pending home sales at 10AM ET (1400GMT).
Financial markets showed a limited reaction to U.S. President Donald Trump's State of the Union address, at which he called on Republicans and Democrats to work towards a compromise over immigration and infrastructure legislation.
In other metals action, palladium prices inched up 0.5% to $1,057.60 an ounce. It slumped to a five-week low at $1,047.00 in the previous session.
Sister metal platinum meanwhile added 0.5% at $1,007.00 an ounce after hitting a one-week low the session before.
March copper gained 0.6% to $3.207 a pound.