Gold futures closed higher on Tuesday ahead of the Federal Reserve's announcement to lower its target benchmark interest rate by 0.75 percentage points to 2.25 percent.

Gold for April delivery rose $1.70, or 0.2%, to end at $1,002.60 an ounce on the Comex division of the New York Mercantile Exchange. The price reached a record $1,033.90 yesterday.

The metal has been pressured by the dollar index, which measures the U.S. unit against a basket of major currencies, was last down 0.3 percent at 71.26. The metal has jumped 39 percent after the Fed slashed rates five times since September, sending the dollar to a record low against the euro.

The precious metal has more than tripled in five years as investment demand has soared and global mine supply has remained low.

As the dollar continues to drop, all price dollar-denominated commodities, such as gold, gain making it more affordable for holders of other currencies.