Gold trades above $1640 before Fed statement

Gold steady above $1640 an ounce on Wednesday trading before the Fed's two-day meeting starting today.

Yesterday, gold prices were boosted by the rise in equities after upbeat earnings, yet the main focus today will shift to the Fed statement on monetary policy which will include the latest growth, unemployment and inflation forecast later in the week.

The Fed is predicted to keep their pledge to keeping interest rate near zero and may give some hints to the possibility of extending stimulus to bolster the easing recovery.

Data from the U.S. released yesterday came disappointing as it showed a drop in consumer confidence to 69.2 in April from a revised of 69.5 while new homes sales plunged 7.1% from a revised of 7.3% advance.

The data affected the dollar negatively as it increased speculations the Fed may refer to possible extension to quantitative easing on signs recovery is waning, especially as the most recent data came below analysts' forecast.

The green currency is estimated to remain under pressure till the Fed statement as announcing QE3 means excess supply in markets and thereby depreciation in value.

The U.S. dollar slipped today against a basket of major currencies as depicted by the dollar index, where the breach of support at 79.30 yesterday paved the way for the drop to 79.15.

The shiny metal, however, may come under pressure from political worries in France and Netherlands amid worries new governments may affect commitment to budget cuts.

In Netherlands, the biggest opposition parties refused to support austerity measures needed to meet EU budget goals, while in France Presidency candidate Hollande's advance in elections is threatening his country's pledge to keep austerity plans.

The yellow metal is currently trading around $1642.70 an ounce coming back above strong support of $1640 after finding support at $1630 levels yesterday.

Crude oil for June's delivery is meanwhile steady to trade around $103.77 a barrel after opening today's trades at $103.74.