Gold price jumps 1% ahead of Fed outcome, Yellen comments in focus

New York (Sept 21)  Gold prices extended strong overnight gains during North America's session on Wednesday, climbing to a more than one-week high as investors awaited the outcome of the Federal Reserve's meeting later in the session.

Gold for December delivery on the Comex division of the New York Mercantile Exchange rose to an intraday peak of $1,333.65 a troy ounce, a level not seen since September 9.

It was last at $1,330.80 by 8:41AM ET (12:41GMT), up $12.60, or 0.96%.

The U.S. central bank is not expected to take action on interest rates at the conclusion of its two-day policy meeting at 2:00PM ET (18:00GMT) on Wednesday.

Fed Chair Janet Yellen is to hold what will be a closely-watched press conference 30 minutes after the release of the Fed's statement, as investors look for any hints on a December rate increase.

Markets are currently pricing in just a 15% chance of a rate hike at today's meeting, according to's Fed Rate Monitor Tool. For December, odds stood at around 60%.

The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.

Earlier in the day, the Bank of Japan kept rates unchanged at -0.1% following its latest meeting and announced that it would modify its policy framework, marking the latest attempt to boost inflation.

Among the changes, the BOJ said it would introduce yield curve controls, eliminate the maturity range of its bond purchases and abandon its monetary base targets.

In the currency market, the U.S. dollar index, which measures the greenback's value against a basket of six major currencies, was at 95.80 early Wednesday, turning lower after rising to 96.29 overnight, a level not seen since August 9.

Against the yen, the dollar dropped 1% to 100.65, well off the session high of 102.78 touched in wake of the BOJ's announcement, as investors remained skeptical about whether the latest BOJ measures will be enough to generate inflation.

Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.