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Gold prices edged higher on Tuesday, as the U.S. dollar stayed a bit sluggish ahead of the Federal Reserve's monetary policy statement, due on Wednesday.
The Fed is widely expected to raise interest rates for the fourth time this year. However, the focus will be on the accompanying statement, which will provide an indication with regard to future increases.
Traders appeared to be betting on hopes the Fed will pause monetary tightening sometime next year. Recently, Fed Chair Jerome Powell had commented that interest rates in the U.S. were "just below" neutral.
Recent weak economic data out of China and the downward revision of Japanese forecasts for economic growth and inflation for the current and next financial years supported gold's uptick.
Gold futures for February ended up $1.80, or 0.1%, at $1,253.60 an ounce, the highest settlement since 10 July 2018.
On Monday, gold futures ended up $10.40, or 0.8%, at $1,251.80 an ounce.
Silver futures for March settled at $14.701 an ounce, down $0.058 from Monday's close.
Copper futures for March ended at $2.6645 per pound, down $0.090 from previous close.
In economic news, a report from the Commerce Department showed a substantial increase in U.S. housing starts in the month of November with a spike in new construction of multi-family homes more than offsetting a continued decrease in new construction of single-family homes,
The report said housing starts jumped by 3.2% to an annual rate of 1.256 million in November from the revised October estimate of 1.217 million.
Economists had expected housing starts to edge down to a rate of 1.225 million in November, from the 1.228 million originally reported for the previous month.
The report also said building permits surged up by 5% to an annual rate of 1.328 million in November from the revised October rate of 1.265 million. Building permits had been expected to dip to a rate of 1.259 million from the 1.263 million originally reported for October.
