Gold regains ground on dollar's retreat as markets await Fed rate decision
Bank of England cuts interest rates
Dollar slips from four-month high
Fed rate decision due at 2 p.m. EST (1900 GMT)
China's central bank still not buying gold for reserves
Recasts as of 1510 GMT
By Anjana Anil
Nov 7 (Reuters) -Gold prices rebounded from a three-week low on Thursday on the back of a weaker dollar and as investors awaited the U.S. Federal Reserve interest rate decision later in the day.
Spot gold XAU= was up 1.3% to $2,692.59 per ounce as of 10:10 a.m. EST (1510 GMT). U.S. gold futures GCv1 rose 0.9% to $2,700.10.
The dollar index .DXY surged to a four-month high after Republican former President Donald Trump's win in Tuesday's presidential election, but erased the gains on Thursday, falling around 0.7%. A stronger dollar makes bullion less attractive for overseas buyers.USD/
"The market is focused on the Fed decision today, perhaps also reflecting to some degree on the BoE's decision to cut rates by another 25 basis points," said Peter Grant, vice president and senior metals strategist at Zaner Metals.
The Bank of England cut interest rates on Thursday but said it saw the new government's first budget leading to higher inflation and economic growth.
The Fed's rate decision is due at 2 p.m. EST (1900 GMT). Markets widely expect the U.S. central bank to deliver a 25-basis-point reduction. Fed Chair Jerome Powell will hold a press conference about half an hour after the release of the policy statement.
The Fed embarked on its policy easing cycle with an unusually large half-percentage-point rate cut in September.
With Trump's impending return to power, "any future rate reductions could well be more difficult to achieve due to concerns that higher prices and stickier inflation force central banks to keep policy restrictive for longer than they would like," Michael Hewson, chief market analyst at CMC Markets, wrote in a note.
Gold is often valued as a hedge against inflation, but rising interest rates diminish its allure, as it is a non-yielding asset.
China's central bank refrained from purchasing gold for its reserves for a sixth consecutive month in October, according to official data.
Spot silver XAG= added 1.8% to $31.72 per ounce, platinum XPT= gained 0.2% to $988.85 and palladium XPD= shed 0.3% to $1,032.14.
Reporting by Anjana Anil in Bengaluru; Editing by Paul Simao
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