By Nick Godt, MarketWatch
NEW YORK (MarketWatch) -- Gold futures rose nearly 2% on Tuesday, receiving a lift from the dollar, which weakened on further European support for Greece and ahead of the Federal Reserve's decision on interest rates.
A lower dollar tends to lift gold as it makes the precious metal more attractive as a hedge.
Gold for April delivery gained $18.40, or 1.7%, to $1,123.90 an ounce in electronic trading on Globex.
The SPDR Gold Trust (GLD 109.97, +1.61, +1.49%) , the largest exchange-traded fund backed by gold, rose 1.7%.
The dollar came under early pressure and the euro rose as finance ministers from the 27-nation European Union meet in Brussels Tuesday and are widely expected to endorse Greece's fiscal austerity plans.
The dollar index (DXY 79.80, -0.45, -0.56%) , which measures the U.S. unit against a basket of six major currencies, fell to 79.98, down 0.2%.
The Fed, which will issue its statement at 2.15 p.m. Eastern, is widely expected to leave rates unchanged near zero. But speculation has mounted that the central bank might remove its pledge to keep rates low "for an extended period of time."
Yet, "though there has been some anxiety that policymakers might tweak or remove its 'extended period' language, most Fedwatchers doubt that will be the case," analysts at Action Economics said in a note.
Other metals also gained. May silver futures gaining 34 cents, or 2%, to $17.46 an ounce. Copper for May rose 6 cents, or 1.7%, to $3.37 a pound.
Palladium for June delivery was up 6.85, or 1.5%, at $467.50 an ounce and platinum for April gained $10.20, or 0.6%, to $1,626 an ounce.
