Gold gained overnight as US Federal Reserve policymakers began a meeting that is expected to provide more monetary stimulus to support the coronavirus-hit American economy, though bullion pulled back from an all-time high reached earlier.

As of 1732 GMT, spot gold rose 0.3 per cent to $US1,947.19 per ounce, while US gold futures settled 0.7 per cent higher at $US1,944.60 per ounce.

Gold surged to a record high of $US1,980.57 earlier, but prices retreated as much as 3.7 per cent later in the session as investors booked profits and the dollar bounced back.

“When you get a strong momentum coming in, you get a lot of speculators who are looking to turn a quick profit,” said Michael Matousek, head trader at US Global Investors.

“Nothing has changed fundamentally at all, the deficits and lower interest rates stoking inflation are still going to be here, so there is no reason not to own gold, really.”

Investors now await the Wednesday outcome of the Fed’s two-day policy meeting after the US central bank announced extension of several of its lending facilities through the year-end.

Stocks fell as a $US1 trillion aid package announced by the US Senate Republicans faced opposition from both Democrats and Republicans.

The ambiguity of the trillion dollar legislation is certainly a positive for gold because it suggests that the Fed will have to take more accommodative measures to support the economy, said Bart Melek, head of commodity strategies at TD Securities.

Gold prices are expected to rise to $US2,300 per troy ounce over the next 12 months, Goldman Sachs said, adding that concerns around the longevity of the US dollar as a reserve currency have started to emerge.

The dollar index bounced off a two-year low on Tuesday but looked primed for further weakness amid surging US coronavirus cases.

Silver retreated after rising 6.4 per cent to its highest since April 2013 at $US26.19 per ounce. It was last down 2.2 per cent at $US24.07 per ounce.

Platinum fell 0.2 per cent to $US943.80 and palladium dropped 1.2 per cent to $US2,283.27 per ounce.