LONDON, March 21: Gold touched a fresh two-week high on Wednesday as investor sentiment firmed, but analysts said any major move was unlikely until after an interest rate decision from the US Federal Reserve.

Spot gold hit $661.85 an ounce, the highest since March prices were at $661.60/662.30, up from $658.40/659.40 late in New York on Tuesday.

The Fed is expected to hold its key interest rate steady at 5.25 per cent, but investors are waiting for the accompanying statement about economic growth and inflation.

The market is pretty confident, gold, silver and platinum are strong, said Frederic Panizzutti, senior vice president at MKS Finance.

US interest rate futures a few weeks ago suggested that the chances of a rate cut until August were nearly zero, now they indicate a growing probability of a cut.

Prices rallied to a peak of $689 in early February, their highest since May 2006, but subsequently tumbled when commodity markets were destabilised by the global sell-off in equities.

Gold’s rise on Tuesday was partly related to a magazine report which said China would stop stockpiling foreign exchange reserves. That dragged the dollar down.

That was one of the triggers for gold's jump yesterday, a London bullion trader said. It was a knee-kerk reaction and people wanted to buy gold, so they used it as an excuse.

—Reuters